Let me know your thoughts everyone! Im very curious to see what the general public is thinking.(agreements, disagreements, any thoughts are welcome) Are you guys bullish on stocks or on bonds?
Here are 3 different time frames for the TLT 20 Year Bond ETF(daily, weekly, and monthly). In my analysis you see we have been in an ascending channel(textbook bearish) for almost 15 years arguably more. We broke out during the major market crash in march of 2020 and stayed above it until around January of 2021.We formed a descending triangle(textbook bearish) and broke to the downside back into the ascending channel. This is what you would call a false breakout which is also bearish. Not only did we break below the descending triangle but for now it has been holding resistance the past week.
Why is this important?
Bonds and stocks are for the most part inversely correlated. So if you trade stocks, bonds are an important market to look into.
The top of the ascending channel has massive resistance as you can see it not only touched it 6 times before breaking out, it also needed a black swan event to breakout of the channel.
You might also see a massive head and shoulders(text book bearish) forming on the weekly. If this plays out we can potentially see a $120 TLT which isn't that crazy of a predication when you consider we were just at $110 in November of 2018. (keep in mind that the first shoulder took roughly a year and a half to form so we can say if this plays out were looking about the same time frame for the second shoulder to fully form) That would also be the bottom of the channel, which if that cant hold support then we can be seeing a $100 TLT which was last seen in January of 2014.
This would be great news for stocks, terrible news for the dollar. Inflation is getting worse everyday. And when you take all these things(fundamental and technical) into consideration it doesn't look good for bonds in the medium term. We have just broken to the downside of a descending channel and flipped to resistance, just broke back into an ascending channel after a false breakout, have been in a clear down trend since the peak during the corona virus crash, and we have room to hit at least $120(bottom of the ascending channel) by July of next year if this down trend continues.
A breakout above the ascending channel retest on the previous resistance and continuation upward will obviously invalidate this analysis
Q2 earnings also start tomorrow and there is very high expectations. If expectations are to be met or even beat, then I would say its more likely the markets will pump stocks and dump bonds. And this uptrend in stocks will be looking to continue until we enter a deflationary phase in the markets. That is when I believe bonds will breakout the downtrend and being to recover.
SPY is also showing it has more room to go before coming down and I will post that in my next analysis.
Here are 3 different time frames for the TLT 20 Year Bond ETF(daily, weekly, and monthly). In my analysis you see we have been in an ascending channel(textbook bearish) for almost 15 years arguably more. We broke out during the major market crash in march of 2020 and stayed above it until around January of 2021.We formed a descending triangle(textbook bearish) and broke to the downside back into the ascending channel. This is what you would call a false breakout which is also bearish. Not only did we break below the descending triangle but for now it has been holding resistance the past week.
Why is this important?
Bonds and stocks are for the most part inversely correlated. So if you trade stocks, bonds are an important market to look into.
The top of the ascending channel has massive resistance as you can see it not only touched it 6 times before breaking out, it also needed a black swan event to breakout of the channel.
You might also see a massive head and shoulders(text book bearish) forming on the weekly. If this plays out we can potentially see a $120 TLT which isn't that crazy of a predication when you consider we were just at $110 in November of 2018. (keep in mind that the first shoulder took roughly a year and a half to form so we can say if this plays out were looking about the same time frame for the second shoulder to fully form) That would also be the bottom of the channel, which if that cant hold support then we can be seeing a $100 TLT which was last seen in January of 2014.
This would be great news for stocks, terrible news for the dollar. Inflation is getting worse everyday. And when you take all these things(fundamental and technical) into consideration it doesn't look good for bonds in the medium term. We have just broken to the downside of a descending channel and flipped to resistance, just broke back into an ascending channel after a false breakout, have been in a clear down trend since the peak during the corona virus crash, and we have room to hit at least $120(bottom of the ascending channel) by July of next year if this down trend continues.
A breakout above the ascending channel retest on the previous resistance and continuation upward will obviously invalidate this analysis
Q2 earnings also start tomorrow and there is very high expectations. If expectations are to be met or even beat, then I would say its more likely the markets will pump stocks and dump bonds. And this uptrend in stocks will be looking to continue until we enter a deflationary phase in the markets. That is when I believe bonds will breakout the downtrend and being to recover.
SPY is also showing it has more room to go before coming down and I will post that in my next analysis.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.