Buy-on-Rumor and Sell-on-News is a classic Wall Street axiom. In the internet heyday, Yahoo! would surge into its earnings announcement and then correct with a pullback near the actual announcement. The iShares 20+ Year Bond ETF (TLT) surged with the lead up to the Fed meeting on Tuesday and peaked a few days before the announcement. The rumor was the Fed cut and traders bought into this rumor in the second half of August. Traders took profits after the rate cut (news) was priced into the bond market.

Despite the rather sharp pullback, the overall trend remain up and TLT finished the week in a support zone. The support zone stems from broken support, the 200-day moving average and the 50-day moving average. In addition, there is also support from the early August consolidation. A harami formed over the last two days with a long black candlestick and a smaller white candlestick (inside day). This shows sudden indecision and also indicates support. The overall trend remains up for TLT and I would expect the ETF to hold this support zone before continuing higher.

Chip Anderson
About the author: is the founder and president of He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at, and provides updates about new features or additions to the site. Learn More
Subscribe to ChartWatchers to be notified whenever a new post is added to this blog!
comments powered by Disqus