A Zephyr from Oz: PeachyFeverr!

Uptrending ABCDs in every time frame are driving rates on the 10-Year Note inexorably toward the 5.30% target shown.  The run-up could accelerate, since Bessert’s abortive experiment last week with quantitative easing laid bare the futility of trying to suppress rates in an environment where private credit is rampant and government debt is at $40 trillion and rising. Gold doesn’t like higher rates, but in this case, bullion is reacting more to the gathering crisis than to monetary conditions.

Yields and gasoline prices are not going to let up before November, and that is why we are about to experience a regime change. The greedy scumwads who control the markets have been quietly distributing as much stock as they can to widows and pensioners before the jig is up. With help from their ignorant shills at all of the major news media outlets, they even managed to short-squeeze the S&Ps and the Dow to new all-time highs in the face of a perfect storm of bear market hazards. That is what bull traps are all about, and why you should shun the party. (See my chat room post about TLT, a solid, dividend-paying alternative that is close to bottoming.)

Switching to the October contract, I’ve used a conventional pattern and a conservative target to project imminent upside to at least 88.96.  The next resistance would be somewhat higher, at 90.70, a Hidden Pivot derived from shifting the point ‘A’ low down to July’s 70.89 print. Any higher would require a pattern derived from a longer-term chart.  Here it is, and the highest price it can project is 102.60. If correct, it would imply that the Hormuz standoff will end, although predicting exactly how seems beyond the capabilities of the punditry or even Trump himself.

The chart presents a moderately bearish picture for the near term that is further mitigated by bears’ struggle on Friday to hold the futures beneath the midpoint support at 7677.25.  They ultimately failed, implying that any additional progress down to d=7516.00 will be challenged by dip-buyers every step of the way. I expect this gasbag to flirt with record highs for the next month or so, buoyed by short-squeeze head-fakes whenever DaBoyz get the chance.  At the same time, weakness in the Lunatic Sector will persist, with little likelihood that the egregiously misnamed Magnificent 7 will make new highs. In summary, this describes a 17-year-old bull market ending with a whimper rather than a bang. All that will change when the dip-buyers are confronted with an avalanche that will make the covid sell-off look like tea and crumpets.

Bulls turned the 124.90 midpoint resistance into tapioca last week, leaving no doubt that the 159.97 target will be achieved. It is congruent with the ambitious target I’ve proffered for Gold (see above), and bolsters the likelihood that both will hit their marks.  A relapse to the green line (x107.37) in the interim would be widely viewed as bearish, but from our perspective it would be a terrific opportunity to augment a long position or get aboard belatedly. Friday’s high fell just shy of a voodoo resistance, but a pop above mid-April’s 136.55 peak would remove it for good.

One might think manipulating yields on the Ten-Year Note would be beyond the reach, even, of Donald Trump and those who serve him in the shadowy corridors of financial power. And yet, each time the interest rate moves in earnest toward the psychologically hazardous 5% level, it swiftly retreats as though blocked by some unseen force. With the national debt creeping up on $40 trillion and the financialized, high-leverage economy going gangbusters, there is no logical reason why long-term rates should not continue to waft higher instead of stumbling and tumbling as they continue to do. A crucial test is not far off in any case, since a breach of the 4.58% ‘p’ support shown in the chart that was narrowly avoided last week is still an imminent possibility. If it happens, that would signal downforce capable of pushing rates to the 4.42% target shown. It would provide a breather for a badly overheated economy in which borrowers are in desperate need of respite. _______ UPDATE (Aug 15): Rates on the Ten Year Note ended the week marginally higher after aborting a downtrend that might have offered borrowers, including the U.S. Government, a hint of relief. They were ascending toward the 47.13 Hidden Pivot resistance shown here, but it will take an energetic push past it to suggest there’s power enough to get to 5%.