Skip to main content

A turn in the bond market? Six reasons to avoid TLT

Bonds got clobbered today, going in the opposite direction as stocks.

I've been watching the iShares Barclay's 20+ Year Bond Fund (TLT) for a while and wondering if the rally was getting tired. Today's action suggests TLT is really pooped and that perhaps the rally is over for now. Let's go through the chart:


Here are six reasons that suggest the rally may have run its course:
  1. Big gap down today on decent though not extraordinary volume
  2. Over the last couple of weeks, Slow Stochastics have been trending down while TLT was trending up. This implies TLT was running out of steam. Slow Stochastics have broken down in a bearish manner now with the value dropping below 50.
  3. MACD has also been trending down slightly while TLT was trending up. MACD has now failed to climb above its signal line (the red line) for a couple of weeks and, after today, is noticeably pointed downward.
  4. Wilder's DMI just showed a crossover where the -DM (bearish Directional Movement) indicator moved above the +DM (bullish Directional Movement)
  5. They aren't shown on the chart above but Money Flow Index and Relative Strength are both looking very much like the Slow Stochastics
  6. Also not shown, Williams %R has dropped like a rock and is actually showing an oversold condition already!
So from a technical point of view, it appears that  the steep up-trend has been interrupted. The indicators discussed above suggest there is further downside.

From a fundamental perspective has anything changed? No nothing has changed except, perhaps, perceptions. Investors may have changed their attitudes about the following:
  1. The end of QE2 - losing the Fed as a buyer of bonds is something the bond market seemed to have shrugged off. Now that the date is drawing closer maybe bond investors are getting nervous.
  2. The game of chicken being played in Washington regarding raising the debt limit - no one seemed to be concerned about this either but now, as the the weeks pass and progress seems to be minimal, this could be another reason for Treasury bond investor skittishness.
  3. Economic data out of China today was upbeat, suggesting that the global economy may have a few breaths of life left in it after all. Similarly, retail sales data today for the U.S. were not horrible, as the bears expected, but were actually decent ex autos. In the face of what might turn out to be a resurgent economy, the puny yields on bonds (and perceived safety of Treasuries) are perhaps not worth the price of missing a rally in equities.
Some might say that we simply saw another simple Risk On/Risk Off knee-jerk reaction today like we have seen so often during the last year where stocks rally and bonds falter and vice versa. On the other hand, there are signs that maybe something more is at work here.

Disclosure: long TBT

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:


Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:


Results here were actually quite good and, to make things even better, the previous month was revised upward.

N…

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, TradingStockAlerts.com and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at Trade-Radar.com

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …