Where Risk Is Least
Bonds are at the danger point; poised for upside reversal.
Bonds up, rates down, is that even possible?
The weekly chart of long bond proxy TLT, is below. It’s not called ‘the danger point’ for nothing.
The danger point is not the top or bottom of a move.
It’s the area where risk is least for either direction. Where the cost of being wrong is reduced as much as possible.
Getting closer-in on the weekly, price action has penetrated support (blue line) and has stopped-dead, so far.
Note the bullish divergence in MACD and MACD lines. It’s not a strong divergence but it’s there.
Next, we have a (bullish) wedge pattern. It’s a big one that took over a year to post.
The False Narrative
If one is serious about their work in the markets, eventually there’s a realization, every narrative is false. The media serves the purpose of the owners and nothing else.
The repeal of the Smith-Mundt act in 2012, allows them to be in complete propaganda mode.
They’re under no obligation to print (or broadcast) anything near the truth, going whole-hog on that ‘freedom’ and fleecing the public at will.
Using that premise, we can say the ‘inflation’ narrative is false or at least twisted; partially true.
The Bond Sell-Off
With incessant dollar ‘collapse’, dollar ‘end of the road’, inflation ‘rampant’, yada-yada, day after day, it’s no wonder bonds have sold off.
At this juncture, there’s either a reversal and much higher levels or down, with rates higher; in turn, leading to the subsequent collapse of real-estate, a-la 2007 – 2008.
Would I personally be a bond buyer at this point … no. I’m not keen on buying the debt, any debt of a bankrupt nation (not advice, not a recommendation).
It’s important to note, if bonds do rally, the catalyst may be a perverse ‘flight to safety’ on the public’s part resulting from significant downside in the overall markets.
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279