Monday, December 16, 2013

Under the Surface.... With Treasuries

Roughly two months ago, I had treasuries were ripe for a rally. And they did, but ever so briefly, as treasury prices once again retested the lows of 2013. That said, treasury prices have failed to push through the 2013 lows. 

More so, the volume on the TLT (or the Ishares 20+ year treasury bond ETF and which I use here as a proxy for treasury prices) since mid-October has been generally decelerating. A pullback on decelerating volume which fails to push through the lows suggests to me something stirring under the surface here. For instance, the RSI, MACD, and stochastic have also failed to push lower. In fact, the RSI and stochastic have diverged somewhat from the price trend.

Most noteworthy is the money flow statistics, shown in the second to the last panel in the second chart. Does this mean we will see higher treasury prices soon? Lower interest rates? The risk/return seems weighted towards going long here.  

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