Update on Bonds: Dec 5, 2014

Yields on the 10-yr have bounced strongly since it reached our reversal target on Monday [see: CIW Dec 1.]  Today, TNX tested both the 20- and 50-day moving averages and are probably ready for a breather, if not outright reversal.

2014-12-05-TNX daily 0750We got the reaction we were expecting, with SPX having backtested the TL and up to 2077 as of this morning.

The end result should be that SPX closes back above 2055 (but, below the SMA5 at 2065 after setting a record last week) in order to back test the red, dashed TL connecting the Jul 24, Sep 4 and Sep 19 tops.

As we look for signals of the chop that should develop between now and year-end, this is a pretty good one.  I wouldn’t be surprised to see a pullback to 22.18 to close the last gap or even 21.80 to tag the bottom of the developing triangle.

If I’m wrong, the SMA100 is just above at 23.93.  But, I don’t think equities are ready to break out just yet.

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