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Yields created a rising wedge up against resistance at (2), which was followed by falling interest rates and stocks. Yields have created a flag/pennant pattern up against resistance and yields are acting a little softer/weaker the past few days, as both are up against resistance at (1).
Watch rates closely…if they break below the bottom of the flag, they could fall a good deal. The “Power of the Pattern” suggests to be an owner of bonds due to resistance in the quiz this week. (see post here) I understand that it is hard to believe rates could fall from here, just sticking with the patterns at hand!
Game Plan…Like the patterns in IEF, LQD and TLT. Use the resistance line in the above chart as a stop!