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Sell Italian Bonds But US Treasury Bulls Beware, Warns BofA

Tyler Durden's picture




 

The combination of deteriorating European assets (topping European bank stocks and vulnerable peripheral debt) and poor price action (the impulsive break of 6m wedge support at 1.3685) augurs for further EURUSD weakness, warns BofAML's Macneil Curry, but it is Italian bond futures that broke a long-term uptrend and "it's time to sell the bounce in BTPs." While 30Y and 10Y US Treasuries are in medium term bull trends, he warns they are approaching a 'basing zone' - bond bulls ("if there are any" he jokes) beware.

 

Via BofAML,

Our arguments for selling €/$ remain unch. The combination of deteriorating European assets (topping European bank stocks and vulnerable peripheral debt) and poor price action (the impulsive break of 6m wedge support at 1.3685) say the trend has turned. We wish to sell a bounce at 1.3735 and would look to add at 1.3825. Price should not trade above 1.3919 and CAN'T TRADE ABOVE 1.3993. Targets are 1.3104 and then 1.2775/1.2685. WE KNOW THAT THE STOP IS WIDE AT THIS STAGE. As such, one should place a partial stop loss at 1.3920.

NOW, WE ALSO WANT TO SELL JUNE BTP FUTURES. Yday's impulsive decline and closing break of the 21d (now 124.24) says the trend has turned lower, targeting the confluence of congestion between 121.18/120.61. Gains can't break yday's high at 125.83.

Sell June BTP futures at 124.67, risking 125.84, targeting 121.18

30yr & 10yr Treasury yields approach their basing zones. Bulls (if there are any) BEWARE.

Both 30yr and 10yr Treasuries are in medium term bull trends. We expect these to continue. HOWEVER, both are approaching levels from which we would expect yields to base and resume their larger, long term BEAR TRENDS. Specifically,3.280%/3.253% in 30s (yes, this is VERY CLOSE) and 2.420%/2.346% in 10s (a bit further away). Back above YTD trendline support at 3.486% in 30s and the old Feb-04 low at 2.568% in 10s say that the larger bear trend is resuming. TO BE CLEAR, the medium term bull trend is still in force, but its conclusion is drawing closer - particularly in THE BOND.

From a US equity perspective, we continue to watch the 50d in the S&P500 at 1867.69. A close below here exposes 11m channel support at 1819.90 and potentially below. 

 

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Fri, 05/16/2014 - 12:47 | 4766920 LawsofPhysics
LawsofPhysics's picture

Technical analysis in fucking casino...

Good luck with that.

Much like a casino, if you know the right person to talk to, or game to play, you will be fine...

Fri, 05/16/2014 - 12:48 | 4766923 CrashisOptimistic
CrashisOptimistic's picture

"HOWEVER, both are approaching levels from which we would expect yields to base and resume their larger, long term BEAR TRENDS."

 

WTF?  Treasury yields have been falling for what, 30 years?

Fri, 05/16/2014 - 13:48 | 4767068 Redneck Hippy
Redneck Hippy's picture

Chart says:  Bonds will go up, until they go down, after which, they might go up again.  Unless they don't, in which case, we told you so.

Fri, 05/16/2014 - 12:50 | 4766925 MWizard
MWizard's picture

3 ways to become frustrated investor and trader

https://www.youtube.com/watch?v=e6fZYR8_j5I

Fri, 05/16/2014 - 12:55 | 4766935 firstdivision
firstdivision's picture

Something as afoot today as VIX is way down an the markets are still down.

Fri, 05/16/2014 - 13:10 | 4766959 Save_America1st
Save_America1st's picture

Isn't everyone just supposed to do the opposite of whatever that Gartman dude does?

Fri, 05/16/2014 - 13:14 | 4766967 Remnant_Army
Remnant_Army's picture

Tuesday, April 26th, 2011

"Italy will be instrumental in the fallout which will trigger the involvement of global powers in a war"

http://www.thewarningsecondcoming.com/arab-uprising-spark-global-unrest-italy-trigger-fall-out/

 

Wednesday, May 16th, 2012 

"Begin your preparation soon for the day of the fallout in Europe is not far away."

http://www.thewarningsecondcoming.com/second-seal-world-war-3/

Fri, 05/16/2014 - 13:27 | 4766995 john39
john39's picture

that second blog entry claims that china controls the world's finances...  common sense and some basic knowledge of history should be enough to reveal that information as totally off?

Fri, 05/16/2014 - 13:52 | 4767076 Redneck Hippy
Redneck Hippy's picture

My St. James version doesn't seem to mention Russia or China.  Need to get the Revised Standard Wignutty Version so I can understand high finance.

Fri, 05/16/2014 - 13:45 | 4767044 SheepDog-One
SheepDog-One's picture

OK so do the complete opposite....got it Blight of America bank thanks.

Fri, 05/16/2014 - 13:46 | 4767059 Boston
Boston's picture

 "HOWEVER, both are approaching levels from which we would expect yields to base and resume their larger, long term BEAR TRENDS.  Specifically,...... 2.420%/2.346% in 10s (a bit further away). Back above YTD trendline support at ....... at 2.568% in 10s..."

I have a similar take on this basing, or support, level in the 10year. But the support must HOLD for Curry to be right. I've been arguing for months here that IF this base/support level fails to hold, THEN there's a huge air pocket beneath this.........no support until all the way til ~2.0%

So, sure be careful. The base might hold. But it could also fail......with the potential result being a HUGE move down in yields.

Fri, 05/16/2014 - 14:39 | 4767270 madbraz
madbraz's picture

Here's to hoping BofA gets killed in their short position.  

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