What a unique world we live in…Holding Government bonds is putting a BIG hurt to a portfolio since 9/1 and holding Junk is helping to push it up! I enjoy pattern hunting, looking for ”exhaustion and reversal points” in a variety of asset classes. Could a key reversal be about to take place in the bond arena?
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A clue to the next major move in the Government bond arena could come from a high yield ETF! The narrow pattern at (3) could break down, which would suggest that the 18-year resistance line is going to hold again at (2).
A belief of mine….anything can happen and quality clues can come from what many feel is left field!
Sonny….GNMA’s (Government National Mortgage Assoc) do have a pretty fair correlation to the long government bond (TLT), on a longer term basis. On a single day basis, like today, you will see some non-correlation.
The bond and yield charts that I have posted are really critical to the NAV of your fund going forward! I would think very hard about harvesting the GNMA if yields breakout of the 17-year channel.
Hey Mark…The high yields have been a good leading indicator for a long, long time. Check out the link below from dshort, posted March of last year, which shows that on multiple occasions, high yields have been a leader, in BOTH DIRECTIONS.
Are Ginnie Mae bond funds in the Government bond arena? I own Fidelity Ginnie Mae FGNMA. It was doing terrific, for a bond fund, but now is doing a swan dive off a cliff. Thinking of selling before it dives below my buy price. I also own TLT. Today TLT was up but FGNMA was down considerably. Just wondering what relationship, if any, GNMA has to other gov bonds. Thanks
Interesting that govt has been wild and junk has been stable for the past year… however I notice that investing in junk (HYG) is very close to investing 50% in total stock market (VTI for example) and 50% in government bonds (TLT). Stocks and govt bonds have moved in opposite directions, and HYG splits the difference… for the past 4 months HYG has outperformed the combination VTI+TLT by approx 3%; for the previous 7 months HYG underperformed the combination by 3%.
Don’t know what this means in terms of the patterns… but it might be that the HYG pattern is just following along as the stocks go up and down and the bonds go down and up.