Tuesday, September 29, 2009

Treasury Tuesdays

Notice there are two upward sloping trendlines that connect the lows on the long term chart. Also note that prices have held above that support even though prices have sold-off.

A.) Prices have run into upside resistance before only to be rebuffed.

B.) Prices crossed over the 200 day EMA, indicating a more from bear to bull market.

So -- what gives with the Treasury market? Frankly, I though the large amount of supply that is hitting the market (and will continue hitting the market) would provide strong enough downward pressure to keep prices moving lower. But that has not happened. Despite record issuance, bond purchases continue to keep up with increased supply. That means there is plenty of demand for the new issues (at least for now). In addition, there is continued talk of the stock market rally being tired/in need of a sell-off etc... So long as there is talk along those lines, Treasuries will be an attractive investment alternative to stocks.