Mish’s Daily: Hump Wednesday – A Look at the Long Bonds TLT

Mish’s Daily: Hump Wednesday – A Look at the Long Bonds TLT
Written by Michele ‘Mish’ Schneider

Instead of falling after the Fed lowered rates, the 10-year and 20+ year yields have risen.
This seems incongruous given the dovish Fed talk.
However, a lot of the cuts were baked into the bonds ahead of the announcement.
How many times have we traders seen a “sell the event” situation?
However, what matters more is what happens from here.
We continue to see “soft” economic data hinting at a slowdown.
While at the same time, many commodities are rallying with news of the China stimulus, geopolitical strife, and weather disturbances.
Plus, we are now hearing talks of more rate cuts on the way this year. First, I doubt that the 10-year yields will rise much more from current levels.

In this chart you can see the rise in rates on the 30-year bonds.
More importantly, you can track the yields to see if this rise since the Fed cut, reverses or continues.
With TLT still above the 23-month moving average and sitting on daily chart support, what should we watch for?
First, we must watch to see if the 50-day moving average holds up.
The price is near enough to consider that level our main support (97.20).
Secondly, TLT had an inside day, which means it traded today inside the trading range of yesterday. A move over 98.89 would be bullish.
Third, momentum weakened some showing a bearish divergence. Hence of break of 97.85 can take it down to the 50-DMA.
TLT is currently underperforming SPY, which is good for the market and risk on.
This is why it is so important to watch these long bonds. A rally in TLT and a potential outperformance of the benchmark could be negative for the dollar and equities, while positive for emerging markets and commodities.
Educational purposes only, not official trading advice.
For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.


Get your copy of “Plant Your Money Tree: A Guide to Growing Your Wealth”
Grow Your Wealth Today and Plant Your Money Tree!

“I grew my money tree and so can you!”- Mish Schneider
Mish in the Media
Business First AM Why DBC is on Mish’s Radar Description-Unsure how to trade this ETF? 09-23-24
Business First AM DJT a Highly Volatile Trade. Mish takes you through levels to hold and to clear 09-23-24
Kitco News Mish and Jeremy discuss how and why gold could head much higher 09—19-24
MarketGauge.com Mish and Geoff discuss how to anticipate and trade current market conditions using MarketGauge’s Big View market timing ratio, the XRT ETF and more. 09-17-24
Stockpick.app StockPick.app presents Mish’s lessons in understanding bonds 09-17-24
Business First AM Mish on 3-D printing and a stock to follow 09-16-24
ProInvestor Insights A comprehensive monthly guide for investors-see Mish’ article on EVs and the future 09-15-24
WealthWise CrossCheck Fed rate cut predictions and top picks 09-13-24
Schwab Network with Nicole Petallides From metals to solar to EVs to vanity trades-mish covers it all 09-12-24
Financial Sense with Cris Sheridan On Commodities, Stagflation and Big Spending 09-13-24
Coming Up:
September 25 Singapore Radio
September 26 Live Coaching for Members
September 27 Real Vision
September 30 CNA Singapore TV
Weekly: Business First AM, stockpick.app
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
S&P 500 (SPY) 565 pivotal support
Russell 2000 (IWM) Range 215-225
Dow (DIA) Looks like topping action
Nasdaq (QQQ) 475 support 485 resistance
Regional banks (KRE) 52-55 support zone
Semiconductors (SMH) 240 pivotal
Transportation (IYT) 67.00 support 69 resistance
Biotechnology (IBB) 140-142 support zone
Retail (XRT) 73.50 support 77 resistance
iShares iBoxx Hi Yd Cor Bond ETF (HYG) Still trading above the 200-WMA-healthy

20240926