Sunday, November 17, 2013

TNX /ZN AKA Tenure AKA Ten Year Note




On August 10th 2013 I wrote:

Its hitting weekly TDST/TDRL levels – going to take some time to consolidate for further move up.

One of the seldom cases when I was 100% correct (just laughing at myself before anyone going to think nonsense like “that perma bear is always wrong”, but the funny part would be that things like that would be an identifier that it is perma bulls thinking that)


I just try to trade and to make money and I use charts because I do not care about “valuations, economy, politics” and when I, in the moment of temporary insanity start to read about “government shutdown” and think it might change ANYTHING in the stock market (due to productive output being cut or less wages being … which were back paid and in some states allowed a-holes to keep unemployment with paycheck …) I am getting hit hard right where it matters – my accounts.


I wonted to do video, but yesterday’s Colorado Rib steak at Smith & Wollensky at Midtown and following bottle of Remy XO which I thoroughly enjoyed and following after cognac part which I enjoyed almost as much as steak and cognac … you know, I am single and truly enjoy being single and all that comes with it – such as being able to find things where they are and keep that stupid wagon wheel coffee table right where it is. (not to mention never having to hear: “Honey you are perfect – now CHANGE”)




So, back to the charts we go, but just a quick note on the market exuberance first:


Despite all the hype over 2013’s long string of record highs, they are merely nominal.  When adjusted for inflation, the SPX’s March 2000 peak was over 2100 in today’s dollars.



That being is a bigger picture on 10 years note – monthly chart

It it (still – no matter how much bears would want to say otherwise) – is in undisputable uptrend, serious attempt was made to break “grey ascending channel” in September 2013, but price quickly retreated back above channel’s lower line.




At the same time – there is another channel in existence, descending “gold channel” and that Sep 2013 attempt to break away from grey descending channel hit my favorite “breakout confirmation .33%” line ( Long time ago that .33 was pointed out to Trading to Win gang by PRSGuitars member)


In short – monthly chart does not really hint on direction other than continuation of uptrend … again, no matter what bonds vigilantes want you to think, no matter how much money was withdrawn from bond founds the truth is:



or, let me rephrase:

downtrend has not been confirmed.





There is a possible Inverted Head and Shoulder in development here.


Blue line coincidentally is right at midline of the Gold descending channel and RED line is almost at the Grey Ascending Channel lower line.

Sep 2013 reversal happened at .33 line of Gold channel and 13 TDCountdown.


As of where the price is right now – there is NO trade, unless BLUE or RED lines are violated. That is a “traditional” approach based on charts’ patterns.





As you see bounce off Grey channel lower line and RED neckline happened on TDSetupBuy9 – it is too late for the trade here and it is not plausible to expect that TDST line at 127’245 will contain move up – during the Setup itself volatility spike caused it to be touched and normally the second touch breaks TDST line …. normally. In this case it will be also the break of Blue H&S line

IF that is what will happen – there might be good long trade coming up on the break of TDST which might lead all the way to the top of Gold channel.




2 days interval


reinforces “long trade idea”. Why?


TDSetupBuy (green arrow) caused full move up to TDST and TDSetupSell only caused 30% retrace down. Next – TDRL at 127’245 (which is coincidentally TDST for daily chart) interrupted up move, but looks like it did not stop it.




And last is 4 hours interval chart.

Diamond is possible which is reversal patter, but performance is truly mediocre.

So, why then I bring 4 hours chart up? It tidy up possible trade entries.

LONG entry – on break of TDRL @127’020


SHORT on break of TDST @125’270 which is at the same time lower line of Grey Channel and quite close to RED H&S line




Sounds like a well defined trading plan to me…unbiased one :)


P.S. On the lower timeframes H&S might be forming off September 9th lows … we need to watch out for that as well…

Keep an open mind…

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