Sunday, August 14, 2016

5 Year Note Analysis 8/14/16

5 Year Note - August 14, 2016

One of the best things I can say about trading a directional strategy is the anticipation for a major change in direction on the higher time frame.


The 30 year bond could stay bullish in low-growth economic landscape.  But the bad numbers comprising the last low GDP #s were mainly from a lack of business productivity.  And who gives a rat's behind?  Businesses are not investing in R&D at this time in the economic cycle. and there is no heat for overtime.

But -- #1, people are working and, #2 housing numbers are good; and #3 retail sales are fine.

So for me the play is on the short-term 5-year note.  The 5-Year is more subject to short-term volatility off any jawboning of future interest rate hikes.  I'm sure there's no way we will see a September hike.  But, we may start seeing some guiding language.  And, if they were to say something concrete like, as soon as X condition is met, we are moving, it would help the markets adjust.  But I don't care what the jawboning is.

I'm watching my chart for a directional move out of flat on momentum divergence.

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