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Eyeing Upside in US Bonds TLT

Interest-Rates / US Bonds Nov 13, 2020 - 01:30 PM GMT

By: Mike_Paulenoff

Interest-Rates

Is it a coincidence that 10-Year YIELD climbed to 1.00% from 0.75% in the days following Pfizer's vaccine announcement (and perhaps in reaction to the apparent result of the Presidential Senate elections), and then hit a wall?

Not if we consider the big bad Fed lurking out there, scarfing up all Treasury supply even if the economic data appear to be stronger than expected.


Then again, there is the virus to contend with, perhaps for several more months, which could (definitely will) impede economic growth. There is also a potential shut down by a new Administration (or so some pundits will have us believe) to combat a "second wave," and possibly, just possibly, investors seeking a flight-to-safety atop a 68% upmove in the stock market since March.

With the Fed lurking, and lots of uncertainty about the virus and growth, who would be surprised to see YIELD head back down precipitously in the days or weeks to come?

The TLT (20+ Yr Treasury Bond ETF) has turned up and is hinting that such a scenario definitely is percolating.

Purely from a technical perspective, the most recent slide from the Aug high at 172.25 into yesterday's low at 154.66 has the right look of downside exhaustion and completion, and is accompanied by multiple positive 4-hour momentum divergences right at the prior significant low in June 2020 at 153.16.

As long as 154.66 to 153.16 contains any forthcoming weakness, TLT is poised for upside continuation to 162.00-163.50 to challenge important resistance, and if taken out, then to challenge 165.50-167.00.

See our 4-hour TLT and 10-Year YIELD charts.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

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