Has the Upmove in Longer-Term YIELD Run its Course?

Mike Paulenoff MPtrader

The most recent Daily Sentiment Reading (DSI) for Bonds is 12!

Purely from a technical perspective, it is not usually a coincidence that the DSI of iShares 20+ Year Treasury Bond (TLT) (the inverse of TBT) presses into extreme oversold condition right about the time the ProShares UltraShort 20+ Year Treasury (TBT)) hits its optimal upside target off of its June-Sept base formation and also challenges the horizontal 200-Day EMA, now at 35.06.

Last Thursday’s high at 35.07 tested, but was not able to hurdle the 200-Day EMA.

TBT has backed away from the EMA amid the oversold condition in Bonds, and despite last Friday's first estimate of Q3 GDP (+2.9%).

At this juncture, my sense is that a counter-trend rally in TBT (upmove in YIELD) is nearing exhaustion-- at least for the near-term period-- which might just extend into next week's presidential election.

Bottom line: My sense is that the U.S. economy is increasingly vulnerable to a recession, and/or a flight to safety into, and immediately after, the election, especially if the Fed makes a dreadful policy error.

Author

Mike Paulenoff

MPtrader

Michael Paulenoff has been a student of and a participant in the world financial markets for the past 26 years, since his graduation from the Georgetown University School of Foreign Service in 1979.

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