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7-10 year bond (IEF) and 20-year bond (TLT) both created inverse head & shoulder patterns in the above chart, which was reflected in the quiz below, suggesting a “Head & Shoulders top in yields“ was at hand. (see quiz post here)
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Now IEF & TLT are testing key resistance, as stock markets around the world are testing key support. As bonds rallied, stock markets around the world cooled off. As usual I would suspect how bonds handle resistance will tell us a ton about the next big move in stocks!
One of the worlds biggest bond companies has been short bonds during the entire rally. If this resistance doesn’t hold and bonds push higher, could a bond “short covering rally” take place? Anything is possible for sure!
