All about 30 year swap, trouble down the road?

Scary pictures, aren't they? 30 year swap rate tumbled from 4.64% in Apr to 3.44% today, 120bps in just 4 months. More stunningly, the 30 year swap spread collapse from -15bps to -42.5bps in just 2 weeks time, I mean 27.5bps more in negative!

The swap rate drop mainly reflect the waning recovery and deflation concerns priced in by investors. It implies that interest rate may stay low longer than previously expected. Meanwhile, the increasing momentum of swap spread tightening in the past 2 weeks I believe is due to the crazy one way receiving by ALM hedgers, pension funds and insurance companies. The magnitude and speed was only seen in 2008 during Lehman collapse time. Based on TA indicators, I see the 30 year swap rate tanking lower with increasing momentum and 30 year swap spread to tighten more. Gloomy, bad for stocks!

Nasdaq's bear structure

Nasdaq has been making lower highs and lower lows since Apr 2010. The island it makes in the past several days and its inability to clear through June's high confirm that the trend is still down. The price closed below both the 50 day MA and 200 MA for the past two days with two big gaps unfilled, further illustrating the downward momentum is picking up. In the lower panel, we can see that the RSI broke down its upward trend swiftly. The initial target for the downside move is the measure move of the bear flag.