The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.
After a long rally in 2014, Treasures faced steady selling pressure last week.
In particular, after the tepid jobs report last Friday, Treasuries had every reason to rally. Initially, they bounced, but then were sold throughout the afternoon.
The overall thesis for Treasuries remains the same–After a thirty-year bull market I believe that rates on the 10-year have bottomed on a generational basis, which means bond prices have topped out.
The TLT ETF illustrates as much, with that major topping pattern we tracked back in 2011-2013 still confirmed. Even with the rally throughout 2014, the argument here was that, and continues to be, that it was a rally within the context of a new bear market. Also note that TLTfound resistance, initially, at the “underside” of the extended “neckline” of the confirmed head and shoulders top (purple line).
Trading against the $119-$119.50 area above as a line in the sand, I believe traders have a well-defined risk parameter to short bonds this fall.
TBT TMV are the levered bearish instruments for bond prices.
For reference, here is basally the flip side of the above chart: A weekly for the 10-year yield index.
Note the confirmed inverse head and shoulders bottom. The recent falling wedge (light blue lines) appears to be finding support to turn rates higher, with the sheer size of the consolidation projecting a move on the 10-year up to about 3.7%, if the upper light blue line is breached.
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