Tuesday, October 14, 2008

Treasury Tuesdays


On the year long chart, notice the following:

-- The market rallied until early March. This was in reaction to the credit crunch.

-- The market sold-off until late June to a bit below the 200 day SMA. This was in reaction to the stock market's rally at the time.

-- The market rallied again until mid-September. Again, this was a safe haven rally.

-- The market has sold off as of late.

The treasury market is caught between two different important cross-winds right now. On one had we have the safe haven play. As investors deal with their concern about the other markets they will flood in Treasury bonds. At the same time, over the last few months the US government has said they will spend a lot more money. That means more treasury bonds will be issued. Increased supply = lower price.


On the daily chart, notice the following:

-- Prices are below the 200 day SMA.

-- All the shorter SMAs are now beading lower


-- All the SMAs are also very tightly bunched right now. This indicates there is a mixture of expectations in the market. There is an even balance between bulls and bears right now.