TIP, TLT and Their Messages, 1 Week on…

[edit] Man, I am a typo making machine when I am in a hurry…  :-(

A little over a week ago we had a subscriber update (now public) on TIP, TLT and some signals for the markets.  Let’s update the charts from the update.

Nominal TLT and TIP continue with their “bullish slant” by the weekly view.


The ratio between them, an inflation expectations indicator, continues to be weak but I continue to favor nominal TIP for any long-term T bond exposure due to forward inflation expectations that I expect to whip up eventually.  But this chart is indicative of the new downturn in commodities and another downturn in the ‘inflation trade’ we have expected.  It was just a bounce after all.  Weekly…


“The daily chart of TLT looks bullish to me as it sneaks outside of a consolidation wedge it has been building since the stock market bounce took flight.”  Too late now, it’s out of the barn.  Here’s the daily from the update.


“I also took a look at daily TIP, which is bullish as well.”  Indeed, I bought this one.  It has since finished the flag consolidation and pulled a channel buster.  Not bad so far for a dividend instrument.  Daily view…


I am far from right about everything, but I do believe I tend to be right about a significant majority of market events because I do work that tries to see things from a lot of different angles.  The above linked update was just one little particle in the spectrum of information we need to make sense of.

“Back to TLT, it is one of the Risk ‘off’ items and that break from the wedge and hold of the 50 day moving averages does not bode well for stocks.  So as long as this condition holds, I’d say that is a negative indicator on the fly for bouncy stock bulls, who seem to be forgetting about the difficulties of January and February (and last August and September).

Conversely, if TLT unexpectedly breaks down, we’d have the opposite signal that perhaps the now more than half year of stock market difficulties is ending.”

Making things more confusing – and interesting – is the fact that CoT data are bearish for Treasury bonds.  So does that mean stocks will be okay?  Maybe.  Does it mean US stocks and bonds may drop together?  Maybe.  Do the work folks.

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