SIGNS OF A HEAD & SHOULDERS IN THE LONG TERM US TREASURY BONDS

SPX: TNX RATIO

When we compare the SPX to the UST 10 Year Note (TNX) we see a clear Head & Shoulders which is either complete or will be by Q2 2019. Over the next two quarters we could see a short term counter rally in the SPX (ie Fed lightens up on the number of rate hikes) while US Treasury yields continue to soften to the 2.65% range.

LONG TERM 30 YEAR TREASURY (PRICE)

We see here a Head & Shoulders that could take the USB to a price of ~115.

In the short term yields could fall towards level that reflect 2.65 on the 10 Year Note. Once the  neckline is decisively broken prices could drop significantly as yields head towards (150-115 = 35 over 30years or ~ 1%) 4.1%