US Treasuries ran higher from the first half of 2015, completing a 3 Drives pattern in the middle of 2016. This is a reversal pattern and Bonds did just that, reversed. They quickly gave up the entire gain over the next 4 months, stairs up, elevator down. They have attracted a lot of attention since then for many reasons. The path of FOMC interest rate guidance, fear of government shut down, tax reform concerns, global political uncertainty and nuclear saber rattling.
But through all of this all Treasury Bonds could do is to retrace 38.2% of the downward leg over 2017. This is the definition of a Dead Cat Bounce. After making a higher high in April and then in June it went on to a marginally higher high in September. This is getting Bond enthusiasts excited as the series of higher highs and higher lows does define an uptrend. But whoa, how weak can an uptrend be? It is more like a sideways consolidation in the Dead Cat Bounce.
A quick look at the momentum indicators bares this out. The RSI has been stuck between 40 and 60 for 9 months. No strength and no weakness. The MACD has been flat for 7 months and almost pegged at zero. The Bollinger Bands® are also flat and have been moving sideways for the last 3 months.
You can get excited about Bonds if you are a range trader. Buy at the bottom and sell at the top. But if you are a Bond investor there has been nothing to talk about for over 6 months. A move over 130 in the Bond ETF (iShares 20+ Year Treasury Bond (NASDAQ:TLT)) would gather some excitement. A move under 123 would confirm the Dead Cat Bounce is over and the downtrend resumes.
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