Thursday, May 14, 2009
A tale of two cities?
Bonds, having fallen through support in such a short period of time has drawn the attention of not just gold-bugs but the powers that be, who couldn't permit a free fall in US debt. No, a nice gradual cooling would be the politically expedient thing to do. A bounce back towards the 100 level in the TLT at the 200 SMA which will soon flatten while the 50 and 100 SMA's look to cross downwards is a classic short set-up. (That is for those confident enough that the Fed will not announce further rounds of QE in an attempt to goose the market)
The inverse or short EFT the TBT is flashing all the tecnical signs of an interm top:
Sto, RSI, MACD turning down on fairly strong volume after a test of the 200 SMA. The 50 and 100 SMA's are curling up nicely and correction down into the 45-47 range is not out of the question. The first shot across the bow is TLT 100, while the war begins at 105 where any advance from there would reassert an intermediate uptrend in bonds. Gold $1000 does not appear in the cards until bonds can fight it out.