Bonds Remain in a Bearish Channel

Earlier this month, the iShares 20+ Year Treasury Bond ETF had a “death cross.” It proceeded downward as expected after that signal, only to rebound. This creates the potential for another continuation trade to the downside.

Today’s idea highlights two other features on TLT’s daily chart. First is the descending price channel in place since the beginning of September. This is the same period that the Nasdaq-100 started lagging and sentiment shifted toward cyclical recovery stocks. November's jump in value stocks was a step further in the same direction.

Next, stochastics show TLT being overbought following the recent bounce.

Finally, the most important chart for TLT could very well be oil. Black gold is on pace today for its highest close since its March 9 gap down. Further gains in crude will lift inflation expectations and bond yields, likely putting more pressure on TLT.

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