Bonds continue to indicate contrarian potential

As the almighty Fed (of Oz) prepares to render its decision…

Treasury bonds continue to hammer out interesting daily chart patterns.

Some notes on this…

  • The daily charts say one thing but the long-term charts (e.g. the 30yr yield ‘Continuum’) say another, speaking to time frames and a wider angle perspective.
  • Markets, while chaotic this year, are playing ball with bonds in that there are do’s and don’ts in play with respect to the bond market view. First you have to know the proper sector/industry correlations with bonds and then you have to get the direction of bonds right (and as noted above, the associated time frames right).
  • It’s best to tune out currency noise (‘death of the dollar!’) and watch bonds. Yeah yeah, we get it. Fiat is dead. Well, as noted on Twitter this morning, the US dollar is and has been undead for decades.

The Fed is busy fighting the last war, which was against the ‘transitory’ (ha ha ha) inflation it played a large role in creating. The great and powerful Fed of Oz is preparing to transfix us tomorrow with its action and its words before it recesses for a couple months. Meanwhile, bonds are doing this (and it is according to NFTRH plans, I’ll tell you that). But again, consider time frames. Daily is daily and monthly is monthly.

This pretty picture could be busted post-FOMC because you never know WTF the machines are going to do on FOMC week (or most any week, really). But at the moment plans are intact for a contrarian situation over the coming weeks/months.

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