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TLT is back at its 2008 highs….”Twin Peaks” in play along (1)? Check out the action in the inset box of TLT along line (1)..NOT BULLISH, yet Support line (2) remains in place. A break at (2) should usher in a ton of sellers, as it did in 2008!
At the same time Consumer Staples (XLP) is at the bottom of its support channel at (3). Keep these two the radar screen, per the could be sending a very important macro message on their next big move!
I just want to add to Chris’ response; There are other factors and indicators before you just trade off T Bonds for Stocks and vice versa; @ Luke: Stocks don’t simply go up and crash; you have consolidation periods etc. and resistance/support levels that you have to track which Chris’ charting clearly does a great job of. You need to understand the correlations between certain investments such as the dollar vs the market; also it is important to not just look at the value of the ETF but also the T Bond rates at the various durations. Last but not least, there are other indicators out there that could help in determining if something is overbought/oversold such as RSI or MFI to confirm your Fibo and MA chart analysis.
TBT would do well on a TLT support break….If you person want to short bonds without leverage look at TBF.
Good questions, Luke81. To add to that, Chris, if TLT is topping out is TBT the logical anti-TLT?
I would like to know if there are 2 possible outcomes to this chart or just one… since you’ve made the parallel with 2008. Other viewers may find this interesting as well.
1) Bonds get sold because people believe the stock rally is for real, and want to switch gears with their money and grab a piece of the action in stocks.
2) Bonds get sold because stocks have begun crashing again, and big players need loads of cash to meet redemptions and margin calls.
Are both of these two scenarios possible at this point in time, or is one clearly only good for a laugh? If so, which one?