Wednesday, October 26, 2016

Yields Are At An Inflection Point So What Is Next For U.S. Treasuries (TLT)?

Treasuries are at a crucial support area at the moment while the market decides what happens with yields, but which are expected to reach 2.00% by the end of the year. This should be bearish for Treasury ETF TLT except that at the moment it's putting in a nice little bullish declining wedge. I put a long/buy signal in yesterday which may have been a little premature because a fall to around $131.50 first seems most likely and can be used a 'stop.' A rise in TLT now would also confirm the overall downtrend so don't think this counter-trend move is a reversal for Treasuries. My momentum indicators look a little tired but are showing divergence so just keep $131.50 as your stop because this rise may just fizzle out instead.