Bob Palmerton's  Instablog

Bob Palmerton
Send Message
Mr. Palmerton has over 25 years experience in Corporate Finance, holding positions as CFO, Director of Finance, Financial Management and Analysis roles for Fortune 500 and multi-national firms (ADP, Honeywell, BOC Group) as well as early-stage growth companies. Mr. Palmerton has raised equity... More
My company:
Baseline Analytics
My blog:
Baseline Analytics
  • Bonds At A Critical Technical Juncture 0 comments
    Jun 4, 2014 7:11 PM | about stocks: TLT, SPY

    A weekly view of the 30-year Treasury Bond price shows an interesting technical juncture. Note the chart below, showing $USB vs. various support and resistance zones printed over the last three years.

    Initial resistance was broken in July, 2011, which led to a rally in the 30-year Treasury Bond to peak a year later in July, 2012 (after testing support in April 2012). Fast-forward to June 2013, when $USB fell below support (prior resistance) and bottomed in December of 2013. Prior support becomes resistance, as noted on the chart, at the 137.50 level, where $USB's rise is being deflected today.

    (click to enlarge)

    What does this mean? The signals in this chart suggest a bond market struggling with the prospects of economic growth and higher interest rates. It may take time to work itself out as to the clear longer-term direction. But recent strength in Financials (i.e. XLF) relative to the S&P 500, suggests a more bullish tone to interest rates (and bearish toward bonds) and may serve as a clue to how this will all shake out.

    Longer-term, we would expect financials, as well as economically-sensitive home builders (also seeing recent strength) to push upward as $USB heads back toward its early 2011 support in the 120 area. Some selective buying of financial, home builders and other industrials may be in order, in addition to avoiding any aggressive buildup in bond positions.

    Visit Baseline Analytics for more research and our TrendFlex family of market trend signals.

    Stocks: TLT, SPY
Back To Bob Palmerton's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Most Commented
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.