Bonds going parabolic
EDIT: Just read this great article on the current bond market. Talks about how complacent its been and how interest raise will cause pain if complacency continues bloomberg.com/news/articles/2015-02-02/if-trading-bonds-is-hard-think-about-the-pain-when-rates-rise
TLT , an etf that tracks the 20 year trsry bounds, are going parabolic. At the same time, TNX, the yield on ten year bonds is falling drastically.
In this chart I show how I use angled trendlines to showcase parabolas. In this case the first trendline has around a 23 degree angle, which is fairly mild. The second trendline has a 45 degree angle, which shows strong bullish move, but still not nose bleed. The last couple of weeks though the trendline has become a 73 degree angle, and on top of that the Index has gapped up and is looking to GAP up today as well.
At this rate this ETF could hit an 80 degree angle.
In my opinion this ETF is in its final moves, although I would still procede with caution as it looks to begin its last major parabolic leg. Other factors such as strong dollar, weak global yields, massive printing in Japan and Europe continue to make owning U.S. dollars and U.S. treasuries a no brainer, which could lead to this having a couple of months left.
In the most extreme case i could see this etf hitting 160, although i think 148-152 might be more reasonable.
Some fun fact.
TLT is at an all time high! All time! Normally people go to bonds when things are scary else where, but TLT is high than it was during the financial crisis and the european soveriegn debt crisis.
TNX, the amount of yield on ten year bonds, has fallen below the yield of the SP500 and Dow. Usually when this happens it doesn't last very long.
Interest rates: I highly believe the federal funds rate will go up this year, although probably by a nominal amount of .25 to .75%. regardless, this will put pressure on bonds As other central banks continue to lower interest rates.
Overall I think we are in the last innings of a major move in Bonds atm.For all we know this could be part of a much bigger, multi-year move, but for now im just waiting for Things to go really parabolic to around 148-152 area before putting in a short.
TLT , an etf that tracks the 20 year trsry bounds, are going parabolic. At the same time, TNX, the yield on ten year bonds is falling drastically.
In this chart I show how I use angled trendlines to showcase parabolas. In this case the first trendline has around a 23 degree angle, which is fairly mild. The second trendline has a 45 degree angle, which shows strong bullish move, but still not nose bleed. The last couple of weeks though the trendline has become a 73 degree angle, and on top of that the Index has gapped up and is looking to GAP up today as well.
At this rate this ETF could hit an 80 degree angle.
In my opinion this ETF is in its final moves, although I would still procede with caution as it looks to begin its last major parabolic leg. Other factors such as strong dollar, weak global yields, massive printing in Japan and Europe continue to make owning U.S. dollars and U.S. treasuries a no brainer, which could lead to this having a couple of months left.
In the most extreme case i could see this etf hitting 160, although i think 148-152 might be more reasonable.
Some fun fact.
TLT is at an all time high! All time! Normally people go to bonds when things are scary else where, but TLT is high than it was during the financial crisis and the european soveriegn debt crisis.
TNX, the amount of yield on ten year bonds, has fallen below the yield of the SP500 and Dow. Usually when this happens it doesn't last very long.
Interest rates: I highly believe the federal funds rate will go up this year, although probably by a nominal amount of .25 to .75%. regardless, this will put pressure on bonds As other central banks continue to lower interest rates.
Overall I think we are in the last innings of a major move in Bonds atm.For all we know this could be part of a much bigger, multi-year move, but for now im just waiting for Things to go really parabolic to around 148-152 area before putting in a short.
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