Known as the “smartest money in the room,” the bond market is showing signs of negative momentum, particularly in the 20-year Treasuries ETF. This trend of increased selling in long bonds is concerning.
After a shift in the price trend at the beginning of the year, with the 50-day moving average turning bearish for the iShares 20+ year Treasuries ETF (TLT), the bond market has become bearish since January 2022. This shift is reminiscent of a similar situation in 2022 when inflation was rising, and the market was heading towards a bearish trend.
The inability of the TLT to surpass $100 and the bearish 50-day moving average suggest that the bond market is gearing up for a bear market and potentially a recession, aligning with the actions in 2022.
Bottom Line
While a short-term correction is expected, leading to a bullish market movement, the bond market’s signals indicate potential challenges ahead. Stay prepared for fluctuations in the market.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.
