Thursday, November 18, 2004

Bonds and Major Foreign Holders

Bonds made a small head and shoulders topping pattern, about 2 weeks long,
in the last half of October.

What could also be forming is a bigger head and shoulders topping pattern.
A larger left shoulder may have already formed during the end of
September. And the right shoulder may have formed this past week.
The neckline is there too. We just need prices to go below the neckline at
about 110.3 to confirm the pattern.

If bond prices go down, interest rates go up. Historically rising interest rates
go with rising gold and silver prices. And, it is about time that bonds start
heading down. They are soooooooooo expensive.

Conducive to declining bond prices could be the Major Foreign Holders of
Treasury Securities report. Some big countries may have stopped increasing
their purchases of Treasuries. Japan is a good example starting with
September on the left, then going back in time:
720.4, 721.9, 695.8, 689.3, 668.0, 652.4, 646.3, 614.5, 583.8
So these numbers could be part of the reasons that bonds look to be
topping out here.

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