NFTRH+; about the bond market

From subscriber Michael, who cannot comment on protected posts due to a glitch caused by the interaction between his and my WordPress accounts…

Sorry, I still can’t post on protected…this would be my comment. TYX? Almost tagged 4%. Close enough for government work? Gold, holding firm at $1670. Almost feels good..which means it probably has another couple hundred $ flush to go.

My answer to Mike was…

No call, Mike. The only way I’d be able to make a strong call is if the sector flushes. That is when I get strong. Short of that I am touchy feely about it. See latest post on daily chart patterns. But also be aware of the seasonal that bottoms in December. It’s a process. That means that (very) slow accumulation (with an escape hatch if the sector pukes) is my tack for now.

While the 20+ year Treasury fund TLT is less clear, the daily chart of 7-10yr Treasury bond fund IEF shows the potential for a short-term double bottom as it is green today. If the double bottom scenario were to play out it would come off of positive divergences by both RSI and MACD.

This would not necessarily be the start of a major rally or certainly not the start of a bull market. But the implication could be to the SMA 50 at least. At best, maybe the SMA 200 if bonds take an interim correction for around our 4% target.

Related Notes

  • The counter-cyclical gold stock sector would prefer weak long-term yields (firm bonds) as the indication would be for waning inflationary pressures.
  • The bond market has turned from secular bull to at least cyclical bear market (it’s already that). To confirm a new secular bear we’d probably see bonds rally, then fail in line with the implications of the 30yr yield Continuum’s breakout from its long-term moving average constraints.
  • Be aware that a monthly chart moves so slowly. The 30yr yield could mess around at 4% (+/-) for an extended period rather than reversing promptly. Also, there is no rule that says our target must hold it back. I think it is probable, but last I checked the bond market does not seem to care what one lowly participant thinks.
  • As if its ears were burning, here’s the monthly chart showing our target in essence having been hit…