Wednesday, September 14, 2016

Elliott wave analysis of US 30 Y T-Bonds and Junk Bonds - declines adding pressure on stocks


                                          US 30 Y T-Bonds

                                          Junk Bonds

US 30 Y T-Bonds and Junk Bonds - declines adding pressure on stocks

Both the US 30 Y T-Bonds and the Junk bonds is declining adding considerable pressure on stocks too. The 30 Y T-bonds completed an ending diagonal with the test of 177.11 and has much more downside to cover, while the Junk bonds complete wave 4 with the test of 36.77 and the break below the support-line near 36.29 was the first good indication that wave 5 lower to at least 30.15 is unfolding. If the Market suddenly is gripped by panic, we could easily see and extension in wave 5, which will prolong the decline in wave 5 to 26.07 almost the bottom seen in March 2009.
The higher yield, will add considerable pressure on stocks too. We saw stocks try to fight their way back after Friday's sell-off, but yesterday they gave up all of Monday's gain and is on the verge for the next big sell-off.
I'm sure the Stock Market will put up a serious fight trying not to cave-in, but I think the long term picture looks weak and the long term topping process that began way back in late December 2014 finally could be coming to an end. We of cause needs more prof, but I do find it very worrisome that the break into new all-time high levels was reversed almost immediately, That is never a good sign.    
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