Running of the Bulls?

I am home with my wife, who is recovering from surgery this week, and it’s tough to want to write about the financial markets.  But when the DOW trades above 20,000 for the first time ever, it’s worth a word or two.  Typically after the DOW has hit *000 levels over the last 40 years, the index has risen higher, more quickly, than just before the thousand-level was broken.  This will pull money out of other assets, like bonds, as traders seek to join the throngs cashing in on the bullish move.  That rush to ride the bull wave will take its toll on rates.  Watch for in increase over the next week. That’s my prediction.  

Serenity Now

All day long, I get asked what pattern I am seeing with interest rates and what is coming next.  When Bonds fall beneath long-term solid support as they have during the month of May, the trading activity typically becomes volatile due to everyone’s uncertainty of the next directional price move–which is typically swift.  The Bears, who just pushed prices below resistance, keep selling in an attempt to capitalize further, AKA “shorting” the market.  Conversely, the Bulls are trying to pull Bonds back higher to increase their gains–or regain their losses.  The Bears currently have the upper hand as the 200-day Moving Average now acts as a strong ceiling of resistance. Clients should understand that rates will not improve unless the Bond can bust back above what is presently a strong resistance layer–the last penetration of the 200-day MA was in March 2014.  But rather than bore you with another chart showing all of that, I thought that it might be refreshing to insert yourself into this peaceful scene for a moment.