10/1/2026
By telescoping, we will take a very long term view of the bond market, and then progresively shorter views. The idea is to cement a long and shorter term trading view.
1942 to Present
This chart is courtesy of my friends at Elliott Wave Intl. This is a chart of bond yields or interest rates.
The ten year Treasury note yields are graphed.
Rates bottomed in 1942 as US involvement in WW II began. The need for massive borrowing to fiance the war effort sent rates higher. The longer the cycle persisted the higher rates became. In the final years leading to the topin 1981, the chart becomes vertical or parabolic. Gerald Ford wore his WIN whip inflation now button but it did no good. rates finally peaked at 15.84% which did not work for a functioning country. One doees see rates exceeding this in basket case countries like Argentina and Zimbabwe. There is always a qualitative solution to a technical peak and it was in the form of Paul VOlcker raising rates to this unsustainable level.
Parabolic rises reverse in mirror fashion, and that is what happened. Rates auuickly unwound from double digits to single. Eventually the FED would try stimulating the economy with 'quantitative easing.' This took rates too low, .51% by March 2020. Note this is a near exact39 years from 1981.
The cycle has now reversed. The ten year note just past 5% and has backed off, note the confluence of the chart at far right.
In the very long term there is nothing Trump or Marsh or the tooth fairy can do to prevent this cycle from climbing as it did in 1942. Rates are already 210x their March 2020 low.
It is said a bear market requires those who did not experience the last one. Those seeking mortgages were not around for 14% mortgages in 1980. Hence they believe 7% is a first time ever event, it is not as the chart shows.
TLT Monthly
Bond prices move opposite bond yields. Here is a chart of long dated bonds, TLT the oft cited ETF for long term prices. This is handy in that TLT on stockcharts can be graphed in intra day pricesl
TLT peaked at the bottom of yields shown on the previous chart. Since then it traced out five waves down to late 202 Since then it has corrected sideway for two long years. the nest big move will be an increase in prices sending the chart up. But first...
TLT Daily
TLT has rallied lowering rates. IT is tropping now. I thought it had topped given the big down move Wed on the FED stand pat announcement. It Looks as though it may have one last pop to finish this fractal cycle.
At that point we want to be long TBF or TBT. These are funds which increase as bond pricds fall.
TBF 2 bars per day 195 minute bars, 2 month chart
this is what I mean by telescoping, we are using shorter and shorter time frames to develop a trading strategy.
Momentum idicatros include Relative Strength RSI at top and PMO at bottom. Never mind how they are calculated, like any good black box, they work. If TBF falls a bit in price fine I can buy more at a lower price.
I anticipate a move up in yields and down in price. So TLT falls and TBF rises.
After that interlude, I am guessing a month, expect a recovery in price lasting some time. This will lower yields. Trump will take credit though he had literally nothing to do with it.
Comment in the comment section or send questions to dennis.elam@att.net.
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