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Coming into 2014, yields had just experienced the largest 18-month rally in 30 years! On Jan the 24th, the Power of the Pattern said their was a two-thirds chance bond prices would rally and yields would fall. (see post here)
Did the rally in yields get overdone over the past year and a half? The Power of the Pattern believed so at the first of this year and this has caused members to be long TLT for months.
The above chart highlights that TLT is reflecting relative strength compared to the S&P 500 this year and could be breaking above a 2-year falling resistance line above.
It appears many people at the first of this year thought the Fed would start a taper program, pushing rates higher. What’s happened instead? Rates have fallen and TLT could be breaking out. What might happen to TLT if the S&P 500 would happen to break steep support dating back a few years? Could that impact Janet’s plans???