Fri, Jan 21, 2022 @ 02:36 GMT
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DOW and 10 year yield still heading down after FOMC

Major US equity indices closed lower overnight. DOW lose -174.07 pts or -0.72% to 23924.98. S&P 500 dropped -19.13 pts or -0.72% to 2635.67. NASDAQ closed down -29.8 pts or -0.42% at 7100.90. Long term treasury yields also closed lower, with 30-year yield down -0.002 at 3.135. 10-year yield lost -0.012 to 2.964.

The reactions, falling stocks and falling yield, argue that markets didn’t bother much with the FOMC announcement.

Overall development in DOW is still in-line with our bearish view. The rebound since late last week we limited by 55 day EMA, the triangle pattern from 23360.29 still holds. Price actions from 2330.29 is seen as the second leg of the corrective pattern from 26617.71. It could extend for a while. But eventual downside breakout is expected. The correction from 26617.71 would extend to 38.2% retracement of 15450.56 to 26616.71 at 23351.24 before completion.

Outlook in 10 year yield is also unchanged. The correction from 3.035 short term top should extend lower to 55 day EMA (now at 2.837), which is also close to channel support. If it’s corrective whole five wave rally from 2.033, there is prospect of touching 2.717 support or 38.2% retracement of 2.033 to 3.035 at 2.652 before completion. That is, It will take a while before TNX would have another take of 3.036 key resistance (2013 high).

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