"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 4 hours The Biggest Winners Of Q2 Earnings Season
  • 1 day Experts Suggest A Gold Shortage May Be Looming
  • 2 days The World Is Drowning In $247 Trillion Debt
  • 2 days Tightening Immigration Policy Could Hurt The Tech Sector
  • 2 days The First Bitcoin ETF Might Be Just Months Away
  • 2 days U.S. Rent Costs Hit All-Time High
  • 2 days European Allies Plan To Continue Trade With Iran
  • 3 days Bitcoin Bounces Off Key Resistance Level
  • 3 days These 3 Industries Are Immune To The Trade War
  • 3 days Is This The Answer To The Looming U.S. Healthcare Crisis?
  • 3 days UK Regulators Hit Facebook With £500,000 Fine
  • 3 days Tesla’s U.S. Tax Credit Coming To An End
  • 3 days Ex-Goldman Banker Caught In A Billion Dollar Fraud Scandal
  • 3 days Investors React To Escalating Trade War Drama
  • 4 days The Three Horsemen Of The Bitcoin Apocalypse
  • 4 days 10 Countries Feeling The Heat As The Trade War Escalates
  • 4 days The Exorbitant Cost Of Getting Ahead In Life
  • 4 days $1,000 Investment Bible Leaked For $10
  • 4 days The U.S.-Chinese Race To End All Privacy
  • 4 days Gold And Silver Struggle As Sentiment Shifts
Life Returns To S&P 500 Ahead Of Earnings Report

Life Returns To S&P 500 Ahead Of Earnings Report

It’s earnings season again and…

These 3 Industries Are Immune To The Trade War

These 3 Industries Are Immune To The Trade War

U.S. President Donald Trump has…

Elliott Wave International

Elliott Wave International

Elliott Wave International

Elliott Wave International (EWI) is the world's largest market forecasting firm. EWI's 20-plus analysts provide around-the-clock forecasts of every major market in the world via…

Contact Author

How Bond Investors Were Fooled Twice

The Commercials and Large Speculators are routinely on the opposite sides of trades

[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.

30-Year T-Bond Futures Weekly Chart 1

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:

30-Year T-Bond Futures Weekly Chart 2

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:

30-Year T-Bond Futures Daily Chart

[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.

 


Markets all around the world are at a critical juncture -- you must see this free report now.

This is the fifth year EWI has created our annual State of the Global Markets Report. And since many markets around the world are at a critical juncture, this may be the most-timely edition of the State of the Global Markets Report yet!

It comes right out of the pages of their paid publications. For a limited time, you can see this report at no cost.

Get your 21-page State of the Global Markets Report -- 2017 Edition 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.

 

Back to homepage

Leave a comment

Leave a comment