The Bonds Bubble Has Not Burst

 |  Includes: TLH, TLT
by: Jeff Pierce

I see two scenarios playing out in bonds – and they both see bonds higher 3-6 months from now. Everyone wants to say that bonds are going to go down, and at some time they will, but I don’t think it’s now. Back in Aug 2008, when we were floating around $100 and many thought Bonds were toast, I predicted we’d be north of $150 before the eventual top is in. I believe this is still true and we may see the eventual top north of $170. It sounds crazy, but from a technical perspective – this hasn’t experienced a traditional climax top.

2 scenarios

1. We breakout of this wedge and then proceed to go into a crazy upward spike that eventually ends in a climax top.

2. We correct here to around the $108 level, and then start to base, move higher, and then go into that crazy upward move and proves all the disbelievers wrong. If we do start to fall, watch the RSI 40 level to provide support, probably about the same time it touches it’s 50 week moving average. If you put on a trade there, use one or both of those indicators as a stop on a weekly closing basis. It’s OK to dip below them intraweek, but a close below would indicate there is more selling ahead.

Both of these has bonds going higher but for now I don’t see a clear tell as to which is going to happen. A explosive move is likely coming though.

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