Once again, I am looking for clues in Fixed Income to decipher the direction of Equity Markets. Generally, fixed income leads the equity markets.
Chart of US 10 year treasury note yield is in a short term down trend since 6-10-09. It is making lower highs and lower lows since then.
But the bearishness can be explained as a 4th wave pullback according to EWP (Elliott Wave Principal). But we need to be vigilant.
The primary and alternate counts are marked on the chart. The prices did surpass the two downward sloping trend lines in October but the crucial horizontal resistance at 3.5% is still intact. The RSI did turn back from 60 level this time. It seems as if the stage is set for the alternate count to become primary count in the next 2-3 weeks. But thereafter, if it is a 3 wave correction (looks to be a Zigzag so far), it will be followed by another 5 wave advance.
I keep on reminding myself that Fixed Income do lead Equities generally :)
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