Bond Reversal

‘The Market Is A Tyrant’ … Wyckoff, 1910

This update, posted over the weekend, showed potential bond capitulation, set-up for reversal.

Wyckoff’s admonition (above quote) from his book Studies In Tape Reading, meant, the market dictates our actions.

Our job is to do what the market is telling us.

If we look at charts of TLT, and leveraged fund TMF, at this point (11:30 a.m., EST), it’s an obvious reversal.

Bonds TLT, Daily

We won’t know for sure if it’s an island gap, until the following sessions.

One indicator of potential (sustained) reversal is the leveraged bond fund TMF.

If we compress the daily chart, capitulation volume is clear.

Last Friday’s volume (29.1-million shares) was the highest by far, since the fund started in mid-April of 2009.

Bonds 3X Leveraged Bull, TMF, Daily

Trade or not?

It’s the trader’s discretion; with it being hard to imagine who wants U.S. Bonds.

However, as Steven Van Metre presents in this update, (time stamp, 3:30), foreign investors are interested.

With that, a long position has been opened at TMF 6.705 (TMF-22-01), with a stop in the vicinity of TMF 6.30.

Stay Tuned

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

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