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Tuesday Macro Technicals - 21 Feb 2017

Here's the regular 5 macro technical charts (going as far as individual commodities, currencies, bonds, and sectors, as well as the rest of the major indexes and benchmarks). No comments on anything except the technical/price developments (albeit we will typically cover the broader case in the Weekly Macro Themes where the technical and fundamental set up produce a compelling investment idea). Even if you're not technical analysis minded it's a useful way to keep on top of trends in some of the main financial markets and as a prompt for further investigation...

In this edition we look at a descending triangle in US 10-year Bond Yields, an ascending triangle in Crude Oil prices, a potential head and shoulders top pattern in the US Dollar Index (DXY), an upside breakout from a symmetrical triangle in Biotech Stocks, and an upside breakout from a bull-flag formation on the Russell 2000 index.

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Also - see my article: "Is Technical Analysis BS?"

1. Treasuries - Triangle (1/2)

-First of two notable triangles, a descending triangle spotted in US treasuries

-Measure rule would set initial price target for a downside break of around a yield of 2%, which would still position it around the top end of the previous range.

-Speculative futures positioning also remains stretched to the short side, which would tend to bias the expectation toward a drop in yields from a contrarian standpoint.

Overall technical view: Would expect yields to fall (bond to rally), but need to see a breakout.

2. Crude Oil - Triangle (2/2)

-The second triangle is in crude oil, in this case an ascending triangle.

-The initial price target would be around $59 a barrel.

-I previously talked about the crunch in volatility for Crude Oil in the commodities special edition of the Weekly Macro Themes, but the implied volatility index for oil has also fallen considerably, and it could be a harbinger of a potential surge in volatility to come... in other words an explosive price move (one way or the other).

Overall technical view: Waiting for the break, bullish bias, could be an explosive move when it gets underway.

3. US Dollar Index - Possible Head & Shoulders Top

-US dollar index has got the making of a potential head and shoulders top; left shoulder and head have been put in, and a possible right shoulder is in progress; the neckline has support around 99.

-If it follows through and breaks the neckline it could open up about a 4 point move based on the head vs neckline measure rule; that would put the price target around 95 ...right back in the old range.