$TLT looks like it's heading to the $120 rangeTLT looks like it's formed a massive weird looking head and shoulders pattern on the weekly timeframe.
So far, it's managed to hold support in the $134 range. However, that range has been tested a number of times now that I think the next time it test on larger timeframes, support will break. There's little support between here and the $120s so the next logical target to me is at $122-123.
Eventually, I can see it hitting the lower targets at $114.
Let's see what happens over the next few weeks and months.
TLT
Potential Bearish Divergence forming in $DXYWith interest rates climbing steeply, the dollar has been strengthening against the $DXY currencies and has made a forceful move to the upside. As of the present date (4/12/22), there's a considerable Bearish Divergence forming. Its certainly possible that if Dollar could gain momentum over time - but it could also set up some nice trading opportunities if it doesn't.
As is often the case, the Dollar has been exhibiting a negative correlation to the S&P for most of this year. Therefore, S&P products could be a good place to take long trades on this idea in the near term. Other ideas could include being long bonds - either with futures or a product like the TLT, and or long the Euro - either with currency futures or the EURUSD FOREX pair.
This is something I'll be watching closely over the days and weeks ahead.
Leading indicators are BearishVery quickly before the market opens...
The JNK ETF is heading further down for lower low -> Bearish for equities.
The IWM ETF is likely to follow down continuing the candle -> Bearish for equities
The DJT ETF broke support -> Bearish for equities
The VALUG failed the resistance, with a bearish candle for more downside -> Bearish for equities
The TIPS ETF gave up and gave way -> Bearish for equities
The TLT ETF is looking for a non-existent bottom -> no flight to safety. just gave way, period.
The VIX just broke out and checked in at the support... spiking up soon?
The HG1! copper futures stalled at resistance.
Overall, Bearish bias on equities
US10Y yields reaching a historical topYield's are tapping the top of this downtrend established since 1981 while the monthly RSI is at the most overbought levels we've ever seen. Also we can see that the yields are above the 144 monthly moving average that typically acts as resistance.
There is still a possibility at this rate, with how crazy this market is, that it could blow out of this channel and then meet resistance around 3.4%. I have doubts this will happen, but anything is possible.
Is J Powell watching this chart and greasing up the printer? Only time can tell...
TLT ReversalNASDAQ:TLT is showing signs of reversal with a reaction off the low of March 25th. Today's catalyst of dividend payouts made it open right at the 50% Retracement Level. If price holds this level a good Risk/Reward trade would take price back to 141 which is the 50% Retracement of the last few months' down trend.
I'm keeping an eye on this channel top for US20YSoon it might be a good time to buy TLT or TMF. The top for bond yields looks near to me as it gets close to this channel top. A good confirmation for a pullback would be to watch for a break in the stoch support.
You could argue that it is also making a megaphone pattern with the support at 2.6% and the resistance at the channel top. I looked into this pattern and it could be bullish or bearish unfortunately, so it is hard to say what it'll do until it breaks either side. I charted a bullish possibility and target if it does break out, such a move could end up quite bad for the market, so I hope it won't happen.
Part 1) Don't Fight The Fed with 30 Year Interest Rate Target.There's an apparent "reverse head & shoulders pattern" on the Monthly 30 Year Yield Chart. The implication of the broken neckline is a reversal of the previous downtrend. Dow theory teaches us that the minimum upside target is the depth of the neckline to the peak of the "head." I see potential resistance at the downward resistance trendline and then again at the previous swing high. If the trend breaks back below the neckline then the whole pattern is suspect. If the reversal is legit then we can suggest the time frame to reach the target would be the width of the "head & shoulders" along the neckline. In this instance the chart is suggesting we get to the price target in about three years give or take.
Thoughts?
$TLT, Bonds long ideaAfter the whole round trip that started when covid hit, I think we are getting closer to a big, long position in bonds. The price range on the chart is where I will start buying and expecting to see seller exhaustion and trouble pushing it down further. Sentiment is really weak and you have people late to party trying to short right now to pick pennies in front of a steamroller. As an ideal target for $TLT we are talking $150 at least, so, due to the magnitude of the move, we are talking about a long term position or around 6 months out. Obviously seeing the volatility in this period and the little liquidity in markets I could be wrong, meaning the move much quicker. GL
Don't fight the FedHow many times have you heard "Don't Fight The Fed"
Well, the Fed is throwing us a gigantic fat slow-ball pitch. It's up to us as traders to hit the ball. JPow said he's raising rates. JPow said he's going to stop inflation. JPow said he's going to be data dependent. Are you fighting the Fed? Short Bonds. Stay Short on Bonds. Don't FIGHT THE FED.
Fed's Catch-22A Catch-22 is a problem for which the only solution is denied by a circumstance inherent in the problem or by a rule. This is exactly the problem the Federal Reserve faces.
Historic inflation continues to accelerate, becoming embedded into the market's expectations and risking a spiral effect
In order to stop rapid inflation, and achieve its mandate of price stability, the Fed must raise interest rates as rapidly as inflation is rising.
The Fed cannot raise interest rates as rapidly as would be needed to slow rapid inflation because it would rapidly begin to freeze liquidity in the corporate bond market.
Rapid tightening would spillover to corporate earnings, asset prices, consumer borrowing and spending, economic growth and ultimately employment, countering the Fed's mandate of maintaining stable employment.
The last time that investment grade corporate bond prices fell below their monthly EMA ribbon support was in March 2020, when the Fed made emergency purchases of corporate bond ETFs to ensure liquidity. Now the bond prices are falling below their monthly EMA ribbon support and the Fed is taking the exact opposite measure by calling for accelerated rate hikes.
Is it possible to avoid a recession at this point? Only time will tell but the charts seem to doubt it.
VIX vs TLT/LQD suggests bear is near. Back away slowly! VIX has been spiking with TLT/LQD, but the last few times just seemed to help turn it around. Looks similar to the new year, in orange. Volatility has been exploding, per usual. Every 2 years since 2008, Vix has made a new support 3pts higher, shown in solid white. I just read an analyst saying 18 is likely the bottom for some time. TLT/LQD has also been on a years long up trend as well, at a similar pace. So I'm inclined to belief this is a good spot to watch for a long scalp VIX entry, and shorts on the indices.
TLT BreakThe iShares 20+ Year Treasury Bond ETF (TLT) tracks an index composed of U.S. Treasury bonds with maturities greater than twenty years. The price of TLT goes down as interest on 20+ year U.S. treasuries goes up. High inflation is driving interest rates ever higher . If inflation does not slow soon, a decades-long trend could end, as this chart is warning.
The monthly exponential moving average (EMA) ribbons have experienced their worse violation in the fund's 20 year history. Typically the monthly EMA ribbons act as very strong long term support. The lower 55 month EMA band can act as a low risk to reward long entry. The price at which the monthly candle closes is determinative.
Fortunately, there is roughly an 80% chance that the 20-year bull trend in the price of TLT will hold in March 2022. (This probability comes from the standard deviation from the monthly mean). So for now, at least, the trend is likely to continue. However, the chart suggests that the decades-long trend is dangerously close to breaking.
TLT - Daily / An Abomination of DebtEventually, perhaps... the 007s will come to understand and accept that the Bond Bull has ended.
TLT will be reduced to a Double-Digit Midget - another JunkcCo ETF used to entangle the Kingdom of
the Rain Dilletanttes.
Nixon knew it back in 1973.
Volker knew it in 1979 when Debt to GDP was nearly Nada.
Now it's well over 200% by Non-Fuzzy Math.
Unsure how anyone conceives of buying this using any/all rationale metrics but they do.
Simply an amazing denial of reality.
To each their own.
Treasuries Continue to Toss their Cookies20-year US Treasury bonds already broke an important level of support (red arrow) and yet again, the ETF finds itself at a crucial crossroads as rates continue to rise, punishing the long-end of the yield curve.
"We" have been taught (as a country) to think "bonds are safe," yet we can clearly see that these 20-year bonds, backed by the full faith of the U.S. Government, are getting curb stomped, losing almost -20% over the course of the last 18 months.
But are bonds "safe," really? It's a seriously problem in our industry - at least I think so...
For any investor with a "Balanced" (i.e. - 60/40) or worse yet, "Conservative" (40/60) portfolio model, how do you (as the investor) react to a portfolio that's losing money, not only because stocks are falling in value, but because bonds are getting taken to the cleaners as well?
Not to go out on a limb here, but I'm going to make the assumption that most of those on TradingView are a little more knowledgable than the average investor. Furthermore, I'd go so far as to say that most are probably avoiding the bond market like we avoided COVID-19 in March of 2020.
I won't make blanket advice here and say to that, "Well.... good, then!"
However, I WILL say that at our office, we've been underweighting bonds, overweighting stocks and commodities, and tweaking the target allocations a bit (to all our models) to make up for the possibility that we might be coming out of a 35-year bull market in bonds, as the pendulum swings toward higher long-term rates 3, 5, 10+ years from now.
While we don't own any 20-year Treasuries at our office, if you DO, I'd be looking at the horizontal line in the sand below current price, which could act as a potential level of support... but if broken, all bets are off.
Leading Indicators messyWith the current global situation where there are day by day developments, the Leading Indicator panel offers similar dichotomy...
The JNK ETF is heading further down -> Bearish for equities.
The IWM ETF is likely to push down in a somewhat limited fashion -> Bearish for equities
The DJT ETF appears to be bouncing up -> Bullish for equities
The VALUG looking for more downside -> Bearish for equities
The TIPS ETF is spiking after a gap up, bullish for TIPS -> Inflation is exploding! Ususally bullish for equities, but in this instance, not likely.
The TLT ETF is bottom feeding, and there is a MACD bullish divergence -> this suggests that the fear is not yet great enough for a flight to safety. Not yet.
The VIX just broke out of a trend line and is pushing towards 45.
The HG1! copper futures suggest an anomalous accumulation of copper, maybe forerunning the equities market upwards, but otherwise, if a general reflection of commodities rocketing in prices.
Overall, Bearish bias on equities, with the chance of a quick rebound soon... but not before a spike down first.
Totally tied to the Russian Ukraine events for now.