Reprise: The Bond Market as Seen Through Stocks: The Top is In

• Posted by Greg Harmon
• on October 14th, 2010

I originally posted The Bond Market as Seen Through Stocks back on September 11. In that post I noted that the run up in Bonds was lead by US Treasuries pulling the Corporate Sector and High Yield Sector along higher. I suggested that the bull market would not end until the High Yield sector, proxied by the SPDR Lehman High Yield Bond ETF (ticker: JNK) started to rollover. Take a look at the same three charts today.

$TLT, iShares Barclays 20+Year Treasury Bond Fund

$LQD, iShares iBOXX Investment Grade Corporate Bond Fund

$JNK, SPDR Lehman High Yield Bond Fund

iShares Barclays 20+Year Treasury Bond Fund (ticker: TLT) has clearly broken the uptrend this week after flirting with it recently. Also iShares iBOXX Investment Grade Corporate Bond Fund (ticker: LQD) after losing its short term up trend Wednesday has lost its long term uptrend today. The cards are collapsing.   JNK has not lost its short term or long term uptrend yet, but today is telling. The bearish engulfing candle at the short term trend line bodes for a lower move. It has been there before September 23rd, but it feels different now. The MACD is waning and about to cross, just like then, but the volume on the latest upswing was lower and the RSI got higher, and with LQD and TLT already breaking the uptrend, we may have seen the top. Confirmation will happen when JNK crosses the trend lines, but I started to short bonds here, by buying the ProShares UltraShort 20+ Year Treasury ETF, ticker $TBT.

Trade’m well!

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