It’s no longer a “stealth” movement but a blatant, obvious development that Bond/Treasury prices have surged in the last few months and continue persistent uptrends thanks to bullish money flow.
Take a moment to review the prior two updates:
“Are You Seeing this Stealth Move in Bond Prices?!” and
“Four Strong Trends Kicking Off 2015”
With those in mind, let’s make the switch from “Stealth” to “Obvious” and update our bond charts and levels:
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With today’s Federal Reserve statement behind us, we’re seeing a surge of additional money into Treasuries, boosting price (at least as seen in the popular ETF with symbol TLT) to fresh new 52-week highs.
Price broke through the $ 136 per share level which takes the price well-beyond the $ 130 per share high from 2012.
Amid calls for a “Bond Bubble” to burst, the reality is that bond prices (again, seen in ETFs) continue to see strong bullish money flow in a “safety play.”
Bubble or not, the reality is that price is – and continues – to surge with the continuing acceleration.
We can see the “Angular Momentum” or acceleration on the pure price chart below:
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I often discuss the concept of “Angular Momentum” which is best seen on pure price charts with trendlines.
Notice the initial trendline off the start of January 2014’s low which continued through October 2014.
“Angular Momentum” or the slope of the trendline rose to connect the late 2014 low.
January 2015 required a NEW trendline to connect the surging prices.
These adaptive trendlines simply highlight rapid momentum – money flow – into the market as the trend accelerates.
There’s no fighting or fading this type of money flow, but increased angular momentum provides high risk to both sides of the market.
True, the bubble could pop, trapping emotional longs (buyers) at the highs while at the same time, this trend could accelerate further toward a “blow-off” top (trapping shorts/bears).
For a broader perspective, we turn to the weekly chart:
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Price developed a broader top or reversal pattern (like a head and shoulders) through 2012 but rebounded with a Rounded Reversal at the end of 2013.
From there, price has traveled higher… and higher… and higher through 2014 and beyond.
Continue watching this strong trend carefully as money flows into the relative safety of bonds (even as US equities flirt with all-time highs).
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Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
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