It seems that the action in bonds over the past week tells me that they want to pause before heading off to new highs. I’m sure many out there will say that the bond bubble has burst and that they’re toast. As of right now I tend to think this is just a little blip and TLT will see much higher prices in the future. By watching the RSI levels (80-40) we’ll get a good idea if this is just a pullback by watching how the chart reacts around the 40-50 level. If it’s going to remain strong it should bounce right off those levels and it may not get that low as dip buyers will be waiting at those levels. I’ll be watching the 20 ema (blue arrow) for first signs of support and that could be the area where were bounce as well.
The only concern that this chart has is the amount of volume on the selling days which normally indicates distribution. However, the strength this chart has shown this year has me convinced we’re going to see 08′ highs at a minimum, and potentially a real bubble with a move into the 150+ area and beyond before the ” bond bubble” pops.
