Charting 30-Year Bond Yields
February 26, 2010  Analysis from Chris Kimble 

Click to View Here's a fascinating chart from Chris Kimble, a 30-year+ market technician and student of Sir John Templeton, who hails from outside of Kansas City, Kansas.

Chris has applied his technical skills to the ongoing debate over the wisdom of buying bonds at the current yields. His chart shows that the yield on the 30-year bond has exhibited a repeating pattern for the past 15 years. Yields are now up against a downtrend resistance line that has generally signaled a good time to buy bonds. But will this time be different? Chris highlights a classic inverse head and shoulders pattern since mid 2007. This pattern often signals a reversal of the previous trend.

Will yields fall? Or will they break through the neckline and head higher? Given the uncertainty about a worldwide economic recovery, the direction of the dollar, the risk of sovereign defaults, and the inflation-deflation dispute, this pattern of potential trend reversal will be especially interesting to watch over the next several months.