Why Bonds Never Became a Short
- Posted by TheArmoTrader
- on May 17th, 2012
The Bull US Bond Market continues, as today marked an all-time closing low of 1.70% in the 10 year US Note yield ($TNX). I noted a few weeks ago that bonds were at a crossroads, and that it was do or die. Well, you can be assured that the bond market “did” and escaped death. The “spike” in treasury yields earlier this year was overplayed, as everyone forgot to use some perspective.
The chart below is as bullish a long-term chart can get. Higher lows for the past half-decade. As you see, the 2008 and 2010 highs, which used to be previous resistance held as support in 2011 and 2012. We bounced perfectly off that area and now are at new highs. If we had closed below that, it would’ve signaled a short-term top (on the weekly) and some selling might have come in. However, that did not happen and as the market corrected this month, bonds took off.
This simple chart pattern told you, “Bonds were never a short”! Catching tops is a suckers game, even if you believe in the myth of bond vigilantes and negative downgrade effects over a sovereign currency issuer.
10 Year U.S. Treasury Notes ($ZN_F)
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
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