The twenty year bond fund (TLT) has been trapped in a tight trading range for 1 month. Unbelievably tight actually. Today it stepped up through resistance.
TLT bottomed on September 17th, and broke through the down trend line on September 19. September 19th marked the September option expiration as well as the Alibaba IPO day. We can see that TLT made a relentless climb while the equity market pulled back. TLT topped the day before the October 16th bottom in the equity market. If the equity market is going to weaken, we could watch to see if the bond market starts to rally like it did in September. Friday we broke above resistance. Today we continued to move higher and we are making higher highs and higher lows for the fourth day.
With the volume tightening up and the MACD turning up above zero, this may be on the way for a move higher. If the purple SPURS starts to break out, that would probably confirm it.
Good trading,
Greg Schnell, CMT
