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<\/figure>\n\nThe action over the past three months has formed an inverse head-and-shoulders pattern on the chart. This is a bullish pattern that often indicates the reversal of a bearish trend and the start of a bullish one.<\/p>\n
The “neckline” of the pattern is at 47.50 (the equivalent of 4.75%). The “head” is the October low near 45.50 (4.55%). So, the pattern is 2 points high.<\/p>\n
If the yield closes above the neckline, then the pattern will likely play out with a 2-point rally on this chart. That gives us a target of 49.50 – or 4.95%.<\/p>\n
That move is on par with what long-term interest rates did last year, despite the Fed lowering short-term rates. And, that move produced a headwind for the stock market – making it difficult for stocks to rally.<\/p>\n
Most investors expect the Fed to lower short-term interest rates following the FOMC meeting next week. Most of the financial TV talking heads expect lower rates to help stocks rally into the end of the year.<\/p>\n
It looks to me like longer-term rates have a different idea.<\/p>\n
Keep an eye on the 30-year yield. A move above 4.75% will likely invite the Grinch back to Wall Street.<\/p>\n
Best regards and good trading,<\/p>\n
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Jeff Clark P.S.<\/strong> This type of market can create fast profit windows… creating opportunities like 1,000% on Netflix in just 7 days… and 300% on Amazon in two weeks.<\/p>\n Any Fed headline, trade deal, or a single tweet from the President can trigger the kind of rapid moves my Crossfire signal is built for.<\/p>\n
\nEditor, Market Minute<\/em><\/p>\n