Friday, September 18, 2015

Long-term bonds: trying to break out?

Let's look at the chart of TLT:

TLT broke out of a 6-month channel in August and has been retesting the channel's upper boundary for three weeks. Now, it is trying to break out of a 3-week channel.

In my chart trading mode, I don't make macroeconomic predictions or engage in economic analysis. Instead, I follow the price. Still, it is fun to think about the implications of particular price moves. If stocks struggle while long bonds shoot higher, we might suspect that the economy is slowing and/or investors and traders fear deflation. Then of course there is what the Federal Reserve may do in response to low inflation expectations (QE 4?) and the Fed's effect on stocks, bonds, and commodities.

Or, we can just follow the price.

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