Near term US 10 year note yield outlook:
In the Mar 1st email, affirmed the bullish view of a large triangle/pennant forming since Dec 15th high (seen as a continuation pattern) with an upside resolution and gains above that 2.64% high. The market has indeed since resolved higher from the ceiling of the triangle (currently at 2.47/49%, now support) and with gains above that 2.64% favored ahead. Note too that technicals are bullish (see buy mode on the daily macd) and longer term view of gains toward the 3% area (see longer term below) add to this positive view. Also, triangles often resolve rapidly and raises some potential further, sharp gains directly ahead. Nearby resistance is seen at that Dec 15th high at 2.63/65%. Support is seen at the broken ceiling of the triangle (currently at 2.47/49%) and the base of the bullish channel from the recent lows (currently just below at 2.43/45%). Nearby resistance is seen at the ceiling of that channel (currently at 2.58/60%) and that 2.64/66% high. Bottom line: did indeed resolve higher from the triangle since Dec with further gains (potentially sharp) above that 2.64% peak ahead.
Strategy/position:
Still long from the Feb 24th buy at 2.34% and for now would stop on a close .02 back below the ceiling of the triangle. But will want to switch to a more aggressive, trailing stop on new highs above 2.64% to maintain a good risk/reward in the position.
Long term outlook:
No change in the longer term bullish view with gains (potentially rapid) toward the 3.00/3.10% area still favored. In the very long term, the market is seen in process of a huge "complex" correction/extended period of wide ranging since the June 2012 low at 1.38%, and with gains to the 3.00/3.10% ceiling/Jan 2014 still favored ahead. Note too as discussed above, triangles often resolve sharply and raises the potential that such gains may be relatively rapid ahead (next few months, see in red on weekly chart/2nd chart below). For those familiar with Elliott Wave analysis, the market seen forming a large "flat" type correction. These patterns break down to a series of 3-3-5 waves and explains that 3 wave decline from the Jan 2014 high at 3.05% to the slight new low on July 2016 at 1.32% (A-B-C). And finally from a very long term standpoint, such gains back toward 3.00/10% (and even slightly above) may be more limited and part of a very major topping and versus the start of a more significant upmove. But at this point, don’t want to get too far ahead of ourselves so suffice to say that gains over the next few months toward that 3.00/10% is favored and will be looking to reassess at that time. Bottom line : gains toward 3.00/10% still favored and move may be relatively rapid (few months).
Strategy/position:
Also switched the longer term bias to bullish on Feb 24th at 2.34%.
Current:
Nearer term : reached target from Jan 22nd email at 2.34% on Feb 24th. .
Last : short Feb 2nd at 2.47%, took small profit Feb 22nd at 2.42%s (.05 profit).
Longer term: bullish bias Feb 24th at 2.34% for a potentially rapid move to 3.05% (next few months).
Last : bear bias Nov 23rd at 2.54% to neutral Jan 13th at 2.40%.
