How Bond Investors Were Fooled Twice
January 23, 2017 10:40 amVideo
Latest News
- Trading Signals for GOLD (XAU/USD) for April 15-17, 2024: buy above $2,328 (200 EMA – 5/8 Murray) April 15, 2024
- Video market update for April 15, 2024 April 15, 2024
- Trading Signals for GBP/USD for April 15-17, 2024: buy above 1.2450 (21 SMA – 0/8 Murray) April 15, 2024
- The dollar has not reached its potential April 15, 2024
- Analysis of GBP/USD. April 15th. Retail sales in the USA allow the dollar to continue rising April 15, 2024
- China’s Q1 GDP growth next on the Asian calendar – Preview April 15, 2024
- Technical Analysis – Goldman Sachs stock gains on strong earnings April 15, 2024
- Trading Signals for ETH/USD (Ethereum) for April 15-17, 2024: buy above $3,125 (200 EMA – 2/8 Murray) April 15, 2024
- Analysis for EUR/USD on April 15th. Monday – a tough day for the euro April 15, 2024
- GBP/USD: trading plan for the US session on April 15th (analysis of morning deals) April 15, 2024
- EUR/USD: trading plan for the US session on April 15th (analysis of morning deals). Euro is at an impasse April 15, 2024
- GBP/USD: Will sterling hold steady against dollar? April 15, 2024
- Technical Analysis – USDJPY rallies to another fresh 34-year high April 15, 2024
- Will Netflix earnings take the share price closer to its record highs? – Stock Markets April 15, 2024
- EUR/USD. April 15th. Bulls panic and retreat from the market April 15, 2024
- GBP/USD. April 15th. The dollar gains confidence April 15, 2024
- Weekly forecast based on simplified wave analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, AUD/JPY, and the US Dollar Index April 15, 2024
- XM’s Heartfelt Ramadan Iftar Support April 15, 2024
- Weekly forecast based on simplified wave analysis of EUR/USD, USD/JPY, GBP/JPY, USD/CAD, NZD/USD, and Gold on April 15th April 15, 2024
- Technical Analysis – US 500 reverses towards 123.6% Fibonacci April 15, 2024
How Bond Investors Were Fooled Twice
The Commercials and Large Speculators are routinely on the opposite sides of trades
By Elliott Wave International
[Editor’s Note: The text version of the story is below.]
*********
Most investors, including large groups of professional money managers, extrapolate financial trends into the future. So they’re often completely caught off guard when a trend changes.
The history of financial markets is full of such instances.
Right now, let’s focus on bonds. As you look at this chart from our July 11, 2016 Short Term Update, keep in mind that Large Speculators represent the trend followers who are usually caught off guard at important price junctures. Conversely, the Commercials routinely take the opposite side of the trade.
The sentiment backdrop for [30-year U.S T-bond prices] is strongly bearish for prices. We continue to point out the extremes that remain in place in the Commitment of Traders data (shown above). In overnight trading last night, prices nudged up to 177^11.0 and then reversed lower during the day session. A decline below 173^15.0 would indicate that prices have reversed their rising trend and a larger selloff is underway.
The high of 177^11.0 remained intact, and as you probably know, prices careened below 173^15.0 as a large selloff took bonds sharply lower and interest rates rose.
Fast forward five months.
Our Dec. 5, 2016 Short Term Update showed subscribers that the price and sentiment picture had changed:
Tonight’s chart shows the weekly pattern in [30-year U.S. T-bond futures], which have made a low at 148^11.0 so far (Dec. 1). … After reaching a 21-year record extreme in conjunction with the wave (5) July peak, both the Large Speculators and Commercials have completely reversed their positions. … A countertrend rally is fast approaching.
Just 10 days later, on Dec. 15, 30-year U.S. Treasury bond prices declined to 147^04.0, and since then, the expected rally has started.
This Jan. 6, 2017 Short Term Update chart tells the story:
[U.S. 30-year T-bond futures] pushed to 153^09.0 early this morning, just shy of filling the open gap at 153^25.0 from November 28.
Investors should now be keeping a close watch on the evolving market action. We suggest focusing on the Elliott wave price pattern and time-tested sentiment measures.
Get 10 Lessons on The Elliott Wave Principle
Learn how you can apply the Wave Principle to improve your trading and investing in this free 10-lesson tutorial. You’ll learn:
Get Details & Instant Access now.
This article was syndicated by Elliott Wave International and was originally published under the headline How Bond Investors Were Fooled Twice. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Related Posts: