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Interest Rate Bottom: The Charts Confirm Yes



August 19, 2014 – Comments (0) | RELATED TICKERS: TBT

Last Friday, interest rates hit 2.30% on the 10 year bond. While counter intuitive, this looks like a long term bottom prior to a move back to 3%. The charts always tell us the truth, so let's take a look. First, note the large sell on Friday with huge volume. This can be seen clearly on the ProShares UltraShort Lehman 20+ Yr (NYSEARCA:TBT). The volume was the biggest since interest rates last bottomed in early-mid 2013. This is known as capitulation, a clear signal of a bottom. In addition, the following day (Monday) interest rates did a complete reversal of their down move. This is known as a reversal candle and is a major sign of a near term bottom. These signals clearly tell investors rates will begin to move higher and could see 3% by year end.

Gareth Soloway


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