The German Bunds
The Bunds held the key support at the 150 level and bounced showing that the target for a temp low this past week appears to be on time. We still elected the Weekly Bearish up at 156 so we should expect a rally back to retest that level at this time.
Nevertheless, we can see how rapidly the market fell and this is what we should expect the other side of 2015.75. Liquidity has declined and as such volatility should rise. This is a reflection of what we are facing especially moving into 2017.
Bank Robber Found Bank Had no Cash
Man in Sweden tries to rob a bank and is confronted by the fact that the bank has no cash. He had to leave without money. Boy! What is this world coming to when you cannot trust politicians and you can’t even rob a bank.
Cameron Wins Surprise Victory – Bad for EU
David Cameron won a surprise victory for the Conservatives. This has now reaffirmed further uncertainty since Cameron promises, if he lives up to his word, a referendum on whether Britain should exit the European Union. Additionally, and renewed pressure from Scottish nationalists who want to leave the 300-year-old United Kingdom. This feeds into what the computer is showing that we will face a rise in civil unrest, which manifests in civil war and/or separatist movements. So the remaining question: Will Cameron honor his word?
Die Welt – the Construction of our Database
The German Bunds – Can’t Wait
The problem with Europe is rather simple. It is run by lawyers who have no clue about how the economy functions. They believe they need only write a law an shazam – the economy will do whatever they command. Once the Bunds broken through the 15620 level, the crash began to move down rapidly to the next Weekly Bearish and the first Monthly Bearish Reversals since there was nothing showing as support between the 150 and 156 levels.
The Weekly Level was showing a near perfect Double Weekly Bearish at 15620-15630. The next level was 15022 on the Weekly level. We can see that even technically there was a sharp gap in support.
The first Monthly Bearish in 15065. We can see on the Energy Models there was no follow-through to new highs as there was in price. The banks were forced to cover for most had sold the Bunds against corporate debt in Germany. That trade has not worked out well and this was part of the fuel behind the rally.
Technically, we can see the breakout channel on the Monthly Level. Once the rally broke out to the upside, it came back and retested that channel from above twice. This was the confirmation of the rally. Now we must watch this channel carefully. By October 1st, this will lie just below 140.
The high formed with the Directional Change the week of April 13th. This week was the target for a turning point and if we hold the 15022 level for the closing on Friday, we should still see higher volatility as people scramble, but a temporary low may be in place for now.
On the Monthly Level, May was the main target for a Directional Change. It appears that the long-end has peaked in general and any reaction rally that could unfold as a flight to quality temporarily after the summer months will be predominately confined to the shot-end of the curve. This is further confirming that we are headed into a serious Sovereign Debt Crisis 2015-2020 with the bulk of the move confined to 2015-2017.