I have been following the action in long bonds, and noting that it
hasn't been good as support levels and trend channels have broken down. This
can be seen in figure 1, a daily chart of the i-Shares Lehman 20 + year Bond
Fund (symbol: TLT).
Figure 1. TLT/ daily
Conversely, the Ultra Short Lehman 20+ Year Treasury (symbol: TBT) is showing
a price pattern on the weekly chart that is very attractive suggesting higher
yields. The close below and this week's close above a key pivot point is a
strong bullish signal. See figure 2 for a weekly chart.
Figure 2. TBT/ weekly
In essence, higher yields are in the immediate future, and this should have
negative ramifications for equities and commodities. Trends in gold, crude
oil, and yields on the 10 year Treasury are rising and this in aggregate will
put pressure on equities. In addition, the overbought and overbullish conditions
as we approach resistance may also exert an influence at this juncture.
Looking at a chart of silver (or gold for that matter), common sense would
argue that some sort of correction is overdue. See figure 3 for a daily.
Figure 3. SLV/ daily
In a nutshell, the market dynamics appear to be changing. Higher yields will
put pressure on equities and commodities. These are the themes worth exploring
over the coming weeks.
Disclaimer: Guy M. Lerner is the editor and founder
of The Technical Take blog. His commentary on the financial markets
is based upon information thought to be reliable and is not meant as investment
advice. Under no circumstances does the information in his columns represent
a recommendation to buy or sell stocks. Lerner may on occasion hold positions
in the securities mentioned in his columns and on the Web site; in all instances,
all positions are fully disclosed at http://thetechnicaltakedotcom.blogspot.com/.
However, their positions may change at anytime. For more information on any
of the above, please review The Technical Take's full Terms of Use and Privacy
Policy (link below). While Lerner cannot provide investment advice or recommendations,
he invites you to send your comments to: guy@thetechnicaltake.com.
Copyright Notice: Except for making one printed
copy of this newsletter or any other materials, files or documents available
from, accessible through or published by TheTechnicalTake, LLC for your personal
use (or downloading for the same limited purpose), none of these said materials,
files and/or documents may be reproduced, republished, rebroadcast or otherwise
re-distributed without the prior expressed written permission of Guy M. Lerner.
Circle Us