Wednesday, January 30, 2013

TLT (long-dated Treasuries) at 2-year channel support

JAN30 2359EST. Kai Ryssdal of Marketplace, the National Public Radio business news show, mentioned the yield on the 10-year Treasury Bond during today's show -- an atypical statistic for that particular program, and anecdotal evidence that bonds' recent slide may be overdone, at least temporarily, given that coverage of the rising yield is reaching more mainstream media.

One way to monitor long-dated US government bonds is with the TLT exchange-traded fund, which tracks the performance of Treasuries with 20 year or longer maturities. A chart of price action since August 2011 shows that, earlier today, TLT reached the support line of a well-defined, 2.5-year price channel, shown in dashed red in the screenshot below.

TLT (20+ year Treasuries ETF). Aug 2011 to Jan 2013. Daily candles.
Also of note: the difference between price and the 200-day simple moving average is at the lowest level of the chart's timeframe (nearly negative $7.00; see the oscillator below the price graph). Such an extreme reading of the oscillator further suggests that TLT is oversold. (That said, securities often persist in oversold -- or overbought -- states for quite some time -- caveat emptor.)