AndyM

Treasuries near reversal. Potential "lightwitch" event.

NASDAQ:TLT   Ishares 20+ Year Treasury Bond ETF
233 0 9
Some time ago I published my view on Treasuries where I was expecting the 5th wave of the ending wedge to occur with just another round of sell-off in equities, just what we saw in Aug last year and Jan this year. Surprise. It didn't happen. We got our w5 in bonds, but a rally in equities instead of a sell-off.

Yesterday Robert Prechter advocated in his EW Theorist the completion of the whole multi-year uptrend in Treasuries, he too views the minor wave 5 as the final one, but he tracks a larger horizon, so according to his research the Treasuries are done on a much wider time frame. Only going down from here, for years ahead!

So we have the following at hand:
1) SPX             is at a very important juncture (both upside and downside moves of high intensity are possible)
2) Treasuries are ready to reverse

If both downtrends happen at the same time, then this will be detrimental for the portfolio managers around the world - for 30 years they got used to the fact that when equities go down, the bonds go up. What if that changes now? Their risk-adjusted portfolios stuffed with equities and bonds may vanish in an instant. Leveraged bonds will not protect equities in the portfolio, but will contribute to the destruction of portfolio value!

Again, this is not a call to action - we need to give the market a week or two to get the things sorted. But by all means I expect some good actionable volatility in H2'16.
United States
United Kingdom
India
Deutschland
France
España
Italia
Polska
Türkiye
Россия
Brasil
Indonesia
Malaysia
Việt Nam
日本
한국
简体
繁體
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Priority Support Contact Support Ideas Published Followers Following Private Messages Chat Sign Out