Monday, March 2, 2015

Treasuries and HY bonds near a top?

US Bonds in general (except TIPs and HYG) are in a well defined uptrend.
However TLT(20+ Year Treasury Bond Fund ETF) has recently hit the upper line of a longterm channel  with an RSI reading of over 80.The last 2 times that a similar situation took place, a major top for TLT ensued.Probably we are at or near a top for TLT. We believe that TLT will move towards the middle channel line where it will probably bounce and maybe retest the recent 138 high.
Regarding TIP(Inflation Protected Bond Fund ETF) it is currently in a trading range between 112 and 116.There is a small possibility for an inverted H&S formation similar to that of 2013 which can push TIP higher.However TIP is still in a downtrend since 2013.If TIP will breakdown below 111 then there is a good possibility for the following scenario
and last but not least, HYG(High Yield Corporate Bond Fund ETF) which is currently near strong overhead resistance at 92.Currently HYG is in a megaphone formation just below the upper line.There is a good possibility for a bounce and reverse of HYG at 92.Will it signal a major top for equities?