Yesterday was clearly a good day to introduce my new Jack in the Box continuation/flag pattern. The double bottom broke down slightly and has then reversed back into a full test of 2299.40. The full ATH retest at 2300.99 is VERY close and should be tested today if we are going to see that full retest. SPX 60min chart:
My intermediate and longer term technical set-up work on 10-year US Treasury yield argues that benchmark yield is in transition from a 35-year bear Market (dominant downtrend) into a multi-year bull market (dominant uptrend).
From 1981, when 10-year yield peaked at 15.84% amid concerns about rampant, uncontainable inflation and stagnant growth (“stagflation”) precipitated initially by the 1973 OPEC oil embargo, benchmark yield steadily and relentlessly declined to a post-financial-crisis 2016 low at 1.32% (see Charts 1 and 2).
From a technical perspective, I can make the case that all of the action in yield from mid-2011 into early 2017—a 5-1/2 year period– represents a major base formation at the conclusion of a generational yield bear market (see shaded area on Chart 1). That said, to confirm the end of the 5-1/2 year transition from bear to bull market, yield must climb and sustain above significant resistance lodged between 2.75% and 3.30%. Yield currently is circling 2.50%.
My work has triggered preliminary signals that the correction of the Sept-Dec upleg in the ProShares UltraShort 20+ Year Treasury (TBT) ended at yesterday’s (Jan 12) low of 38.19, and that a new upleg has commenced.
Let’s notice that the 24-hour upmove from 38.19 has stalled just below 39.90, which represents the resistance line off of the Dec high, and which, if (when?) hurdled, will trigger upside potential that projects to a retest of the Dec-high zone at 41.70 – 43.00.
Only a decline that breaks 38.19 will neutralize the constructive chart set-up.
Mike Paulenoff is founder of MPTrader.com, where he provides live intraday analysis and trade alerts covering the equity, commodity, and currency markets.