Thursday, July 8, 2010

TLT Watch

The exchange-traded fund that track 20- and 30-year Treasury bonds, TLT, is moving to bear phase on some key technical indicators.

A falling price for long-term bonds means expectations of higher interest rates and possibly an increasingly robust economic recovery and Fed action to staunch the chance of inflation taking hold.
TLT $100.05

Person's Proprietary Signal (pps) turned bearish yesterday, and the macd followed today, dropping below the zero line on the fourth day of a decline.

TLT pays a 3.71% annual dividend, distributed monthly. It goes ex-dividend on the first of each month.

TLT has been trending upward since hitting a swing low of $88.77 in April. July so far is the first month since then to see an intra-month decline. On the other hand, July's price hit a higher high, at $102.66, and has not yet made a lower low. So there's no way to say at this point that the uptrend has ceased upping.

(Or, better put, "ceased its upward course". I've been watching Buffy the Vampire Slayer on DVD, and it does have an impact on one's language, not always for the better.)

To be considered in a serious downtrend, the price would need to break below $96.41, or even $95.10 -- the prior higher low is a bit ambiguous -- and then set a lower high before breaking below the new lower low. So it has a ways to go before showing its cards.

A move above $102.66 would suggest the uptrend is continuing its upward course.

Reversal Levels
  • $102.66, +2.6%
  • $100.05 <== You are here.
  • $99.55, -0.5%
  • $96.41, -3.6%

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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