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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (18588)	1/16/2017 4:31:12 AM
From: John Pitera	1 Recommendation of 33421

We May See Major Resistance Test On 10 Year Treasury Yield In 2017 Tom Bowley \| January 15, 2017 at 04:19 PM Banks threatened another breakout on Friday before stalling and dropping after an early morning surge higher. Bank of America (BAC) credited higher interest rates for its earnings beat Friday morning and said it was anticipating significantly higher net interest margins in 2017. So how much higher will the 10 year treasury yield ($TNX) move? Well.....technically, it's easy for me to imagine the TNX rising to test a major yield resistance level at 3.00% and its long-term downtrend line closer to 3.50% sometime during 2017. With a TNX close at 2.38% on Friday, there's plenty of room for yields to move higher before testing major resistance. Check out the chart: It's been a decade since we've tested this long-term downtrend line so rising to that level would not seem out of the question, especially since the Fed has told us to expect rate hikes in 2017. Should that downtrend line be tested, *bank profits should continue to expand rapidly*, leading to industry outperformance in my view. stockcharts.com ---------------- (editorial note by JJP.... I think I am leaning in the Gundlach camp where if we see the 10 year yield go above 3.00% then we can start to seriously talk about the bond secular downtrend in yield and uptrend in price that has been in effect since Oct 19th 1981 will be over. JJP.. Bill Gross's 2.60% is a little too close for me, The TIPS, the Treasury Indexed US bonds have been showing some weakening of the immediate inflationary expectations of a Trump presidency have been weakening since around Dec 12th..)

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