Could Long Term Interest Rates Jump 20% in the Coming Months?
That possibility is developing and is predicated on two important technical patterns as discussed below.
First, between November 2007 and March 2008, the 30 year bond yields (Symbol: TYX) formed an Inverted Head & Shoulders pattern. The projection for this pattern is a yield level of 53 which is 20% higher than yesterday's close.
Second, the TYX has now developed a positive Divergence similar to the Nov. 07 to January 08 divergence that resulted in a sharp rise.
Both conditions are now suggesting a high probability for a possible up move that is 20% higher than we are now. Such a move would coincide with a further tightening in available credit in the banking sector and also put pressure on home sales and variable rate mortgages.
Investors should keep an eye on how these patterns play out, because they would have a negative impact on economic conditions, corporate profits, and the stock market. (This chart is updated daily on our Advanced subscriber site.)