iShares Lehman 20+ Year Treas.Bond Looks Extremely Bearish on Monthly Chart


The iShares Lehman 20+ Year Treas.Bond monthly price chart looks very bearish to me right now and seems to be telling us that higher interest rates are coming in the months/year ahead.

The iShares Lehman 20+ Year Treas.Bond is showing a very large descending triangle pattern on the monthly chart after being stuck in a messy trading range for the last 10 months.  The last two days down volume was extremely heavy and in the near term is a telling sign of a possible continuation move as we go into the second quarter time frame.

We all know that the broad market averages do not like higher rates so this chart if eventually confirmed paints a picture of eventual pressure on stock prices.

It also seems to be saying that the US dollar Index will extend its northward move in the weeks/month ahead.

It seems like the whole world already knows about the US of A debt problems and the degree to which we are over extended in terms of our current borrowing and our ability to borrow any more.  But up until now it just seems that no one has had to pay the price for those excesses.  It seems as if no penalty or real crisis has evolved into something tangible yet.

All of that may be about to change based on the looks of the TLT chart.  If the world’s appetite for US of A debt finally reaches the saturation point then we could see some dramatic moves in this ETF in the months/year ahead.

It all boils down to supply and demand.  If demand dries up then price has to come down to find a new batch of more willing buyers.  But if the buyers do not show up and price continues to decline then you have the makings of a bond price decline that turns into a panic.

Right now I am viewing 88.23 as a key level that must hold on the TLT, otherwise it could activate into an extended breakdown out of this large descending triangle pattern.

Another way to play this extended decline in bonds is to look at the TMV which is the Direxion Daily 30 Yr Trsy Bear 3X Shares and it moves in the 300% inverse direction of the TLT. 

Posted in ETFS

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