Tesla & Bio-Tech near short-term support

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Tesla and Bio Tech have been great performers over the past 24 months. Earlier this year both of them gave back some of there gains and then started another impressive rally.

Both are making attempts to make strong closes above highs hit 6 months ago, as they both are facing short-term support at this time.

Kind of interesting to see how much these patterns look alike since the first of March this year! How these stocks handle short-term support could have some influence on the future of NDX 100 index.

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Junk bond fund repeating 1999 & 2007′s pattern?

 pimcohighyieldfundrepeatingmessagesept13

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The Pimco High Yield fund (PHDAX) for a period of time around from 1997 to 1999 & 2005 to 2007 found it difficult to move higher, creating a series of level highs. At the same time it created a series of higher lows. Once old support was tested as resistance and it failed to move higher, large declines in junk bonds and the stock market took place.

Over the past couple of years, the fund may have created a pattern that looks similar to 1999 & 2007, as it seem to have trouble getting above the highs hit in 2007.

highyieldspreadbreakingoutsept13

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The above chart of the B of A/Merrill Lynch high yield adjusted spread highlights that when sharp rallies took place in 2000 & 2007, stocks turned soft.

It might pay to keep a close eye on the Pimco high yield fund and the adjusted spread in the next few weeks, to see if any important messages come from the junk bond complex.

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10-Year Yield could move up over 150% says Joe Friday

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The Power of the Pattern suggested that interest rates were about to blast off in May of 2013, because it looked like a bullish inverse head & shoulders pattern in yields was in play. (see post here)  What happened right after that posting? Interest rates experience the largest 18-month rally in yields in the past 30-years, beating the next biggest rally by 50%! (see rate aberation here) 

Could an even larger bullish inverse head & shoulders pattern in yields be taking shape? The Power of the Pattern suggests it could be possible, if a few other developments take place.

It appears that a larger inverse H&S pattern in the 10-year yield could be forming. What needs to happen to make this huge rate rally possible? First step is to break above falling resistance in yields that has formed as rates have fallen this year. If a break of that resistance takes place, the next huge step is to see if rates can break above very stiff & heavy resistance at the neckline of this potential bullish yield pattern.

Joe Friday says.....If it does push above the neckline, the "measure move projection in rates" suggests that the yield on the 10-year note could reach almost 7%. 

Besides bonds (TLT), watch Utilities (XLU) and Real Estate (IYR) to see if these interest rates sensitive sectors reflect concerns about rising rates.

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