Bond prices have been under pressure the last 100+ days. What bond category has held up fairly well during this time frame?
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Ironic that JUNK BOND (high yield bond fund) has held pretty steady during this time frame? Suggested to get out of bonds in this post (see post here), before this big decline took place. Is it now time to buy the hard hit government bond/TLT sector? Yields have now reached a key 15-year resistance line! (see post here on dshort)
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I understood that for most it didn’t make sense to BUY BONDS the first of March, (see post here), yet we were able to make 15% during the bond rally (see post here) I understood that for most it didn’t make sense to SELL BONDS the first of September (see post here). I was able to pick up some decent gains shorting bonds (see post here)
Now I suspect that it doesn’t make sense to BUY BONDS again; yet from a pattern perspective, the “Power of the Pattern” is suggesting to do so after the 13%+ decline in TLT!
Interesting Chris, I lost only 0,11% today, and I’m still up 1,53% after having bought it yesterday… this actually might only be the dollar strengthening against the euro!
Frank….yes I am. Not real impressed with todays action though, after being up 1% and losing all its gain.
Chris are you still holding TLT?
Chris…. See the link below, these bonds have different friends and enemies. Sometimes they correlate and sometimes they don’t. This is another example of why I believe so much in the POP (Power of the Pattern).
https://www.kimblechartingsolutions.com/2010/10/confusing-positions/
You are a long time viewer of my work and you know that I have favored high yields for a long-time and continue to beleive they are a good proxy for stocks going forward. High yields are “stocks in drag” so per rising rates, if rates are rising due to an economy getting better, then junk does ok. Thanks for the great question!
I was trying to think why this would was true with all the volatility coming into these other “safer” asset classes.
I guess part of it could be obviously interest rate risk, (general theory being that high yield is more correlated to equities), but the immediate question becomes how has high yield performed in other periods of rising interest rates? Any thoughts?
What are you thoughts on stop level?
I’m thinking the play is harvest at 97 ish hopefully?
Thanks.