Monday, June 20, 2011

Treasury Tuesdays

Last week, I wrote the following about the Treasury market:
The overall IEF chart -- like the TLT chart -- is positive (with the same criteria). However, notice that prices are bunched over the last week or so. And the last two days have printed very weak candles with a possible MACD sell-signal on the way.

The MACD and price action is giving me pause. While these are not definitive sell-signals, they are chips in the armor. If you've made a profit, take it.
While the IEFs and TLTs have enjoyed a strong run, I've grown concerned about the trade. This started with the TLT's MACD giving a sell signal. In addition, the TLTs have been moving sideways for the last two weeks and have had a declining CMF. Finally, prices are becoming entangled with the 10 and 20 day EMA in a pattern called "barbed wire." As the chart below shows, it looks like upward momentum has stalled:

While the IEFs are still technically in an uptrend, prices have dipped below support and are currently trading on top of support. In addition, the CMF is declining and the MACD has also given a sell signal:

While I'm not seeing anything to indicate a mass exodus from with security, I do think the rally is over for now. I'd take profits if you haven't already.