With geo-political events taking center stage of late I was asked today if it’s time to get back into bonds.
Before we can make a decision we need to examine two charts.
This first chart is of 30-year treasury futures. What I’ve highlighted is the relationship between price and volume. As you can see bonds moved higher on higher volume on Thursday and Friday of last week.
What I find interesting is that after a weekend of troubling news that volume actually decreased as 30-year treasuries moved higher. If the market was panicked or worried volume for these bonds would have soared higher today.
Now let’s take a look at TLT which is the bond ETF. Most investors don’t buy futures on bonds. They typically use TLT as their investing vehicle of choice.
Just like the chart above TLT moved higher on Thursday on higher volume, but actually declined on Friday. Be careful to note on Friday how TLT closed above the 21-day exponential moving average.
On Monday after a weekend of strive overseas in Iraq and Ukraine TLT did close higher, but volume was lacking. This notes the second close about the 21-day EMA, which could signify a shift in trend to the upside.
So what’s the plan?
The more adventurous could start to build a small pilot position in TLT. As they say risk happens fast. If you’re looking for some downside protection TLT is a fine choice, and in full disclosure, we own it but at a lower entry price. With that said I want to see how bonds play out after Wednesday’s FED announcement. This could be a head fake by bonds and I want to be judicious in initiating any new “bearish” type plays.
By defining a process for stocks, bonds and commodities while adding the markets direction I can add a level of predictability and consistency to my portfolio growth. You can do this too. If you want to learn how please join me on Thursday June 26th at 7 PM. I’ll be teaching you two specific strategies that will help you grow your account.
Seating is limited. If you’d like to attend please click this link to RSVP – http://noramassetmanagement.com/workshop/
To see my watch-list of stocks for this week please watch this video – http://noramassetmanagement.com/videos/weekend-video-update-9/
If you missed this week’s “Your Money” Radio Program, you missed a lot. I covered my rules based investing that I didn’t have time to delve into during the video. You can access the podcast by clicking this link – http://www.thewallstreetshuffle.com/category/podcasts/
I hope this helps you!
Best Regards,
Tim
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