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Has the bond bubble burst? ETF trending provides a clue

I have written recently about the ETF Scorecard at Alert HQ Premium (the free preview is still available, so check it out). This report ranks over 300 ETFs according to how strong their trends are. To complete the ETF picture, I have created two reports that shows how the rankings have changed week-over-week. I offer you the ETF Trend Performance report and the ETF Price Performance report.

Let's take a look at the ETF Trend Performance report. The ETF with the worst performance this past week is the iShares Lehman 20 Year Treasury Bond Fund (TLT). This ETF's ranking fell by 3 points. Given that the maximum score is only 6 points, this was a significant drop, indeed.

Also at the bottom of the performance rankings this week there is the Vanguard Long-Term Government Bond ETF (VGLT), score down by 2.75 points, and the Vanguard Long-Term Corporate Bond ETF (VCLT)  and iShares GS iBoxx Investment Grade Corporate Bond Fund (LQD), both down 2.5 points.

Looking at the ETF Price Performance report, the bond funds weren't quite the worst performers based on the percent change in price this week but they were certainly down there in the lower end of the report.

One of the better performers this week was the ProShares UltraShort Lehman 20+ Year Treasury (TBT) which was up over 7% over the course of this last week.

Conclusion --

There has been a significant change in trend in the bond ETFs. With the filtering on the trend indicators and the moving averages, the fact that the scores changed so drastically in one week suggest that we have an abrupt reversal in progress.

If this bond rally was actually a bubble and that bubble has burst, TBT could sure be the way to go. And you might also want to take a look at the ProShares UltraShort Lehman 7-10 Year Treasury (PST). Both of these ETFs

Disclosure: no positions

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