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When equity fear was very high around 10/6, TLT was testing its 2008 highs (excess fear was driving investors to Govt paper). See “Twin Peaks” post of 10/6 (see post here)
After a breakout above its 2008 highs didn’t take place, TLT fell a quick 10%+ in 30 days. The past 7 business days has witnessed a nice rally in both TLT and IEF, bringing them back to the top of their newly established falling channels.
Yes the news out of Greece/Europe is important, yet the price action of TLT and IEF up against falling channel resistance might tell us more about the outlook for the global economy than revolving leadership door in many countries in Europe.
Resistance is resistance for these bonds and one must respect the resistance line and that these bonds created rather bearish wicks yesterday! The next few days action in TLT will tell us a ton about equities, since they are working on the underside of necklines right now! (See neckline post)