Bonds! Will! Not! Die! Do You Care?

I can count at least 10 tops in the Treasury Bond ETF, $TLT, since last July. In fact I have numbered the in the chart below. But in the end, every one of the first 9 have been bought. Now we sit with a higher high, after 4 consecutive lower highs. WTF? I thought Bonds were dead. Well maybe this 10th time is the charm. Monday did confirm a Shooting Star reversal lower, and there is a big gap to fill down to the 120.50


area. But the yellow lines outline a Shark pattern that is playing out with a Potential Reversal Zone between 128 and 131.20. That is a long way up from here. Does that mean that this rally in equities has to end? How can Bonds go higher and Equities go higher? Isn’t that money leaving Bonds fueling the rise in equities? Has that ever happened before? Uh, yes. How about for the last 4 years. The chart below shows that the trend for both Bonds and Equities is and has been higher. Now if you are a day trader don’t even

tlt spy

bother to send me an inflammatory response, you should not give a crap about correlations. Swing traders, yes I see that there have been times when one took control and the other pulled back and that could happen again. But our jobs as traders should be to first identify the trend and then work with that knowledge. The trend is up, for both Treasuries and Equities.

Carry on.

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