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Between A "Selling Panic" And Black Crows, Where Do German Bunds Go Next

Tyler Durden's picture




 

Battered by Bill Gross and Jeff Gundlach, SocGen warns that the current correction in 10Y Bunds remains atypical from a technical perspective and bears the characteristics of a panic selling.

Via SocGen,

The successive weekly closing price could possibly form Three Black Crows, a pattern which occurs after an overstretched and prolonged up trend suddenly reversed. It is composed of three consecutive large bearish candlesticks, like a staircase, with each closing price near the low of the week. Next weekly closing price, if largely below the previous one (0.36%) would result in such formation.

 

Yesterday, the 10Y Bund breached the broad upward channel on the lower side (0.465%) and the correction extended towards the 200-day Moving Average (0.62%) with momentum indicators (Stochastic) hitting a multi-year floor. The down move witnessed in last few days has been pretty sharp and hasn’t been backed by a distribution. Generally such a steep move highlights corrective retracement. Only after formation of lower lows and lower highs can one form an opinion if the trend reversal is at hand.

With short-term indicators also at extreme levels and positively diverging from prices a pullback remains overdue. Thus, 0.62% should limit immediate downside and a pullback should take place towards 0.485%/0.465%, the 23.6% retracement of the sell-off and more importantly the broad channel limit.

Going forward, sustenance below the channel lower band (0.465%) and a break below the 200-day SMA (0.62%) would then give renewed signs of bearish momentum.

In such instance, the sell-off would continue towards 0.80%/0.87%, the 38.2% retracement of the downtrend from 2013 lows with interim level at 0.72%, October highs and 61.8% retracement of the last up move.

 

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Wed, 05/06/2015 - 13:07 | 6066198 LawsofPhysics
LawsofPhysics's picture

wow, almost up to half a percent....

< yawn >

Wed, 05/06/2015 - 13:10 | 6066241 knukles
knukles's picture

Excuse me, but is this a crowded theater?
FIRE!

                        Three Black Crow Pattern?  You gotta be fucking kidding me.
                                                       Publish or Perish

Wed, 05/06/2015 - 13:11 | 6066252 nuclearsquid
nuclearsquid's picture

Three black crows?  The technical diviners certainly have a flair for the occult.  Next report will discuss entrails and chicken bones.

 

Wed, 05/06/2015 - 14:09 | 6066459 Pool Shark
Pool Shark's picture

 

 

Three Black Crows?

 

Looks more like 'Three Little Pigs' sold too many Bunds and are gonna regret it...

 

Wed, 05/06/2015 - 13:23 | 6066286 Amish Hacker
Amish Hacker's picture

Yes, historically a low interest rate, but remember that fortunes are being made and lost in the move to it. If rates go from .25% to .50%, they are still historically low, but someone has doubled their investment, and someone else has lost half of theirs, even before considering leverage levels on the bets. 

Wed, 05/06/2015 - 13:41 | 6066357 LawsofPhysics
LawsofPhysics's picture

People gambling in the bond "market" with CBs (a.k.a. "the house") who have the ability to move this in any direction they want are getting what they deserve. 

 

This is not your grandfather's bond market for investing in your country.  This is gambling, period.

Wed, 05/06/2015 - 17:22 | 6067141 Butterflying
Butterflying's picture

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... www.jobs-review.com

Wed, 05/06/2015 - 12:55 | 6066200 Philo Beddoe
Philo Beddoe's picture

When it is true panic selling markets will go dark seemingly by accident. 

Wed, 05/06/2015 - 12:55 | 6066201 KnuckleDragger-X
KnuckleDragger-X's picture

Things are getting strange around the edges and soon to be moving toward the center......

Wed, 05/06/2015 - 12:56 | 6066204 buzzsaw99
buzzsaw99's picture

the ecb would like to sincerely thank gross and gundlach for the better prices

Wed, 05/06/2015 - 12:57 | 6066208 NoWayJose
NoWayJose's picture

It is not 'panic selling' - it's called de-leveraging.  And while the move of 1/2% may seem small -- imagine a big bank with 40-to-1 leverage betting that Bunds would go negative!

Wed, 05/06/2015 - 13:08 | 6066240 LawsofPhysics
LawsofPhysics's picture

That's not a bank, that's a fucking casino.  See the problem yet?

Wed, 05/06/2015 - 13:26 | 6066288 Kirk2NCC1701
Kirk2NCC1701's picture

Um... at the end of the day, the House wins?  Gamble accordingly?

Just a wild & crazy hunch..

Wed, 05/06/2015 - 12:59 | 6066214 Freebird
Freebird's picture

Bullshit levels are quite high

Wed, 05/06/2015 - 12:59 | 6066215 Yancey Ward
Yancey Ward's picture

I thought it actually looked like the "Giant Bird-Shit Stain on Windshield" pattern.

Wed, 05/06/2015 - 13:04 | 6066227 astoriajoe
astoriajoe's picture

https://youtu.be/8_5U0M9ErGA

we'll all be talking to angels soon enough.

Wed, 05/06/2015 - 13:12 | 6066254 SheepDog-One
SheepDog-One's picture

Why would there be any panic? The Central Gangsters got this shit.....right?

Wed, 05/06/2015 - 13:15 | 6066261 stant
stant's picture

What does laggards ouiji board say about this?

Wed, 05/06/2015 - 13:17 | 6066270 JBilyj
JBilyj's picture

there's not enough Fibonacci used on the graphs of this site.

Wed, 05/06/2015 - 13:42 | 6066363 SheepDog-One
SheepDog-One's picture

Plus more cowbell needed too.

Wed, 05/06/2015 - 13:21 | 6066282 madbraz
madbraz's picture

"sell-off"???  this is all short-selling, none of these hedgie speculators own anything, let alone possess the capital deployed in these raids.

Wed, 05/06/2015 - 13:51 | 6066389 Kirk2NCC1701
Kirk2NCC1701's picture

As I posted a few times before, when the Yields of even Bunds and US Bonds go to zero, there will be no more Debt Towers to hide in for the pension-minded masses. 

At that point, I'd expect those towers to go the way of WTC7: a natural or 'managed' free-fall.  With the top floor Bond Derivatives putting on the Mother of all shows.

Better buckle up, Dorothy, cause Kansas is going...

Wed, 05/06/2015 - 22:07 | 6067837 RMolineaux
RMolineaux's picture

No mention of the "great short."   Who has the bunds to lend to the shorters?

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