Are You Prepared For a Crash?

• Posted by Greg Harmon
• on November 12th, 2013

Everybody seems to be looking for a market crash. Well I have found a market where I can see the possibility, Treasury Bond prices. As a stock trader, I use the ETF $TLT, to measure Treasury Bond prices and it gave me very accurate readings up until two months ago. With hindsight I can see that it was my inability to read and the bonds trying to confuse. Let me explain.

The chart above shows the TLT since the the discussion of a taper began in May. Technically, this chart moved lower in a step wise fashion and on every bounce, all 10 off then, printed a topping and reversal candle. It is what happened after the 10th one that confused me. it started printing higher highs and higher lows. This is a reversal of trend and got many bullish on bond prices. It stopped me out of my bond short as well. But with the move back lower Friday, it is more clear that this may have just been a bear flag. If it continues then there is a nice opportunity to get short on a move under the previous lows at 102.11 as the Measured Move lower would target a move to 86.50.

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