Wednesday, 8 February 2017

Bear flag for bonds

US equity indexes closed moderarely mixed, sp +0.5pts at 2293. The two leaders - Trans/R2K, settled lower by -0.2% and -0.4% respectively. VIX settled -0.7% at 11.29. Near term outlook offers a daily close in the sp'2300s before the weekend, with the 2320/30s viable next week, especially if oil resumes upward to the 53/54s.


sp'daily5



VIX'daily3



Summary

There is little to add on what was a day of minor chop. How its notable that the market still managed to break new historic highs for the Dow and Nasdaq comp'.

VIX remains naturally subdued as the US capital market is extremely confident.


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Update on US bonds: via TLT, monthly'2


Last November saw a decisive break of rising trend that stretches back to at least early 2014.. if not a decade, depending on how you draw it. Price structure since the Dec' low of $116.24 is a rather clear bear flag. The lower bollinger is offering the $110s by early summer.

Nothing has changed since I first stated at the start of the year. I anticipate three rate hikes this year - May, Sept', and Dec'. If correct, TLT will be rather close to $100 by year end, and that has implications for all sorts of things.

Goodnight from London