This 10-Year T-Note chart has started to correct, or it sure looks like it. It’s very early in the stage but my bet is that the May 2018 low could be the bear market low. Since all bond futures tyepsare diagonals we should expect wild pattern that have little resemblance of a great looking impulse. T-Notes have retraced the previous declining 4th wave which was a Minute degree move, so Minute degree top is a logical choice at this time to work with. I may have to change it on a later date as we have a long way to go with a 5th wave in Intermedeate degree. I don’t believe the 10-Year T-Note bull market is finished as we should still be heading up to my Cycle degree wave 4 peak.
Be it a run to safety or any other reason, once a bullish phase starts nothing will kill it until it is ready to die. Many of the COT positions in bonds have to swing into the opposite direction before the bullish trend will end. No amount of fundamental BS will stop a bullish move, besides very few will remeber what made the T-Bond market turn in the first place. This bullish cycle should last as long as it takes for the stock market to hit a Cycle degree 4th wave bottom.
Many are still expecting a major decline with rising rates, but markets always do the opposite of what the majority thinks is going to happen.
Since my last update the 10-Year T-Note traveled down a bit further and then started to reverse on May, 17. I belive that this massive bull market in T-Notes has been running since the early 1980’s as an inverted Cycle degree 4th wave, and it’s still not finished. All commodities show diagonal patterns for their entire Submillennium degree 5 wave sequence, so there is no way of getting away from counting diagonal patterns as conventional wave counting will not make any sense. This rally looks great, but it’s still very small and barely registers on any weekly chart. Short term anything can still happen but hopefully, this rally has got some legs.
Market players could be running to T-Notes and cash as a place to hide from the potential bull market wreck in stocks. In the long run another zigzag bull market with 3 waves in Minor degree can develop so we have to keep our mind open to this possiability all the time. The choice is simple enough if this bull market is not finished, as it must push to new record highs again. Mind you it may also take a few more years to play out.
The news that Bonds, stocks and gold are falling at the same time is no surprise. I have been warning about this for sometime already, but when the media picks up on it, it already becomes old news. My personal guideline is that when your friends start talking to you about this bond decline, then it’s already old news. News circles the world about as fast as the crowd can do the wave at your basic hockey game. Every major bond trader has that type of news high on their reading list.
Yes their may still be a bit more downside to come but it looks like it may have already turned. I’m not going to draw you a pretty arrow pointing up as I think my readers understand the basics of the idealized form. I expect a full reversal as this 10-Year T-Note bull market is far from finished.
We are finishing a 4th wave correction in Intermediate degree with a Minor degree zigzag. The current commitment of traders bond postion has shifted to the long position by a huge amount. When commercial long prositions get this skewed then the 10-Year T-Note bear market is going to run into very stiff resistance where a bull market has the base to grow from.
Just to get warmed up complete 4th wave retracement will happen and eventually this T-Year T-Note chart will soar up and beyond the top of the chart. Chances are extremely high that diagoanl wave structures will be the main theme with another potential zigzag we have to contend with.
I can’t always keep up with any intraday charts, but I will try and catch strong turnings as much as I can. Everybody is freaking out about much higher rates to come, but I don’t see it that way if this bond bearish phase was just a correction in a bigger bull market.
Bonds have been in a bull market since about 1982 with a Cycle degree wave 4 bull market. This bull market is not finished so one more extreme high should happen. I’m dealing with 30 Cycle degree 4th wave patterns, and I have many asset classes where I also have 4th wave declines in Intermediate and Minor degree 4th waves.
The moves that force short players into a trap are the best reversals, as the power of the bulls will slice and dice all the bears betting on a continued decline.
This 10-Year T-Note bear market has now been going on since the 2012 peak, and it’s still not finished, just yet. I believe that T-Notes have been in a zigzag crash in an Intermediate degree 4th wave crash. To compound wave counts even more, we have to deal with all the diagonal wave patterns that are always present. The April peak was my diagonal 4th wave peak, which was followed by a decline that is not an impulse at all but must be counted like a diagonal.
The first zigzag looking crash looks like a zigzag, but I was trying to force it into an Impulse which never worked. Once I applied my standard diagonal count down, then things started to fit much better. All sorts of zigzags show up with the first one looking near perfect, but these zigzags stretch beyond anything ever described in the EWP. From the wave “2” top in Minuette degree. The wave 3 followed which also only contained “one” zigzag, with the “B” wave riding high in the wave 3 counter rally, followed by a long declining “C” wave stretching wildly in the process.
The reason for an extra explanation, is that the markets are full of these types of extended “C5” waves, especially when we are in a 5th wave as well. This is only one type of diagonal decline and probably one of the easiest to count out. From late April to our present May peak is another diagonal 4th wave rally, which must be followed with another zigzag in Minuette degree. This should take T-Notes to new record lows, but then smash into a 4th wave bottom in Intermediate degree (Red) In the next couple of years we should see the bulls return as there are just too many people forecasting rates to climb further.
On Current COT reports it shows the commercials in one second highest long position in over a year. This does not support a huge bear market in bonds, but rather supports a bullish phase to come. Most other types of bonds are also in net long positions, so it’s not just one contraian reading, as there are 3 or 4 other types of bonds as well.
All the bearish wave counts in the world will get trashed if we think that the “Big One” is here! The last bullish 5th wave in Intermediate degree should also represent a zigzag rally, but this could be so choppy, we will be convinced it’s not a bull market at all.
This decline could last until the end of May and until this bottoms, upward pressure on rates will remain.
The media have gone wild in reporting the bond market crash. When I read about intense bearish news about any asset, I usually look at the bond charts to see what, if the asset class is ready to reverse and go the other way. This 10-Year T-Note pattern is one of the wildest I have tried to count out. The reason for that is because this T-Note chart is part of a giant Cycle degree wave 4 rally, which is a big bear market rally still going on since about 1981 or about 37 years.
I am tracking this bond market for close to 20 years now, as this bond market pattern seems to have hit a peak back in 2012 and has now been in about a 5 year bearish trend as no new record highs have been recorded. I have mentioned it before in that I don’t believe that this bull market is over yet, and what we had is more like a zigzag correction as the wave 2 correction in Intermediate degree only fits best as a flat. A flat in a diagonal bull market? Yes, I have no problem with that as waves 1-3-5 should mostly be zigzags.
The 4th wave has come back into the peak of wave 1 which instantly throws it out as a nice high quality impulse. Friday I saw the T-Notes started to rally so the bottom could be in already. One COT report has the commercials carrying their biggest long positions in the last year, which does not support a basic bear market for very long.
If you think that 10-Year notes can’t rally, then look what happened after the 2000 crash bottom. A “B” wave bottom in Primary degree. T-Notes soared as the markets crashed, as investors searched for safe-havens. It might take a few years or more, but we could still see a major rally for the next several more years. From the 2000 bottom to a potential 2021 peak would fit well into the time cycle. We are witnessing a big bond bear trap in the making and once the stops start getting hit, it could start to accelerate it’s really.
I could draw you a nice Intermediate degree falling wedge as well, which I use for ending bearish trends. I don’t have the time to keep updating Intraday reports on this, but I will try to get important turnings before they start to happen. Drawing in wedges after they are done is kind of silly as anyone can see the angles after they have completed. The only good wedge is the one we see before it happens not after.
Since we would be in a diagonal 5th wave we should expect a zigzag in Minor degree.
If you see the dark red lines on the right side of this chart, you are looking at the commercial traders long positions. The light Magenta color is the short positions of the speculators (expert fund managers) Both in opposing views. There is no way I can keep supporting a bearish outlook as this could all turn around and surprise the entire world! It might be slow at first, but it should pick up steam as the bullish phase returns.
The crashing bond market is in the news, as the rally up to the April peak was super choppy, and then decided to pack it in and crash to new lows. I believe we are declining from a 4th wave in Minute degree. Starting the decline it looked diagonally like right away, so instantly we have to look for the connecting zigzags to confirm it. There may still be a bit of a downside, but I would be expecting a correction of another 4th wave rally in Minute degree.
This rally can go sideways and force us to pull out our hair, or it can soar right back up to the top trend line in short order. Either way it will shut the Bond Bear’s mouth for awhile. So far this diagonal decline tells us it is a 5th wave down, as it’s any 5th wave where they can show up most frequently.
This is a classic move and a very common diagonal, as they can get so choppy where this pattern is much harder to see. In a diagonal I like to see that waves 1,3 and 5 are zigzags, with wave 2 and 4 being any regular correction, even a triangle. A triangle in a diagonal 4th wave is a real mouth full, which can produce super choppy waves that will defy logic. 4th waves are also warning us that a higher degree is going to be terminated on the 5th wave, before this decline is finished. All 5th waves must be capped, which should be followed by another much larger bullish move.
Investors might be running away from the safety of bonds, but they could also come running back with a vengeance. I’m not certain enough to call bonds with a Cycle degree 4 peak as finished yet, but any bond rally will help to take the pressure off the Fed, from having to keep on raising interest rates.
How rallies act is always important, as a choppy rally will tell us that it’s just a little bear rally! It may take longer than the end of the month to play out, but any counter rally correction needs time to fully develop.
This chart I show is at another very low point of T-Notes. As long as these 10 Year T-Notes keep crashing chances are good that interest rates are going to keep going up. The entire 10-Year T-Note bull market is a big diagonal bull market. I’m pushing my luck if I think that we can hit a major bottom soon so these intraday wave counts can be off by a mile.
The media is freaking out about the bond crash so a reversal would be nice. This diagonal 4th wave bottom should produce 5 waves back up in Minor degree which can turn into a zigzag. They say that three more rate increases are coming this year, but they will only come if the free market allows them to do it.
The 30-day Fed Funds rate also controls what the Fed can do, or has to do. Commercials are net long the T-Notes but not by a large extreme. Even that can produce a short bear market rally that many may thing is heading back into a bull market.
The need for safety in T-Notes could also send T-Notes soaring so the investors that are dumping right now can flip on a dime and chase yet another bullish phase. If this rally starts to distort too much or go sideways with a questionable pattern, then this big bearish move may not be finished.
When we look across the top we can see a big flat where they practically were giving the money away for close to 6-7 years. How deep this 30-Day fund rate can crash down to is just pure speculation at this time, but we could start to see a flat bottom form when it finishes going down.
Setting any moving averages 90 and 30 days will show the “Death Crosses” and “Golden Crosses” sooner than later. The last “Death Cross” happen at the top about 2 years ago, so eventually we would have to see the “Golden Cross”, after this chart turns north again.
The fear of higher rates turns bullish stock investors into chickens. When bonds implode this sends interest rates skyward, which the Fed is powerless to stop. If Russia and China are dumping only higher rates might stem the tide. Due to the nature of the choppy decline, there is the strong possibility for this T-Bond chart to soar to new record highs one more time.
We are still a bit short of touching my invisible bottom trend line, so a bit more downside can still happen.
The entire T-Note bull market is an insane example of a diagonal wave structure. Longer term the entire bull market can get retraced which does not bode well for rates in the longer term. Until this potential 4th wave bottom is cleared up a complete implosion of T-Bonds is not in the cards at this time.
Eventually T-Bonds will also hit a Cycle degree 4th wave peak, which would coincide well with the stock bottom in Cycle degree wave 4.
In general, when any bond declines in price, the rates go up. Government paper works on what they call the 10-Year T-Notes. Did this party end in late 2012, or are we still faced with a record move to the upside? This bull market has been going on since 1982 from an inverted Cycle degree wave 3 base, and technically should end with a Cycle degree 4th wave top. The entire bull market is a very messy pattern as it is next to impossible to find any decent or high quality 5 wave impulse sequences. Stocks are heading down in a potential 4th wave decline, so in that respect we want to keep our options open.
Investors can still seek refuge in T-Notes when carnage hits the stock markets. Long term this Cycle degree 4th wave rally should get completely retraced, but that could still take years before we will know for sure. Following the 2000 bottom, T-notes developed a typical diagonal wave structure which is a challenge to count out at anytime.