The Day the Music Died for Bonds

• Posted by Greg Harmon
• on April 3rd, 2012

Tuesday was a pivotal day for the Bond Market. It had been trying to recover since a fall earlier in the month before the release of the Fed minutes took the wind out of it. As measured by the ETF, $TLT, it had already shown significant damage on the monthly chart, below. The Relative Strength Index (RSI) is heading lower, the Moving Average Convergence Divergence (MACD) indicator is heading for a bearish negative cross as price moves back toward the falling 20 month Simple

Moving Average (SMA). The weekly look is not any better. The RSI is nearing a turn to bearish and the the MACD has been negative and growing for some time. The move Tuesday is testing the bottom of the short bear flag with a Measured Move below to 107.50, but no real support until 100.

A clear bias lower on the weekly timeframe with only 110 holding it up. But it was the move on the daily chart Tuesday that could be the catalyst for the move lower. The break of the bear flag lower gives a Measured Move to 106. But as seen in the chart below there is no real reason for it to stop there. There is an abyss of previous volume until it hits 95.70. the RSI is bearish and heading lower

and the MACD is about to cross negative. The lights are going out. The fire has turned to a couple of smoldering timbers. The music has died.

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