Tuesday, September 9, 2008

Treasury Tuesday's


Again, remember that the federal plan regarding Freddie and Fannie have thrown a huge monkey wrench into any analysis of the markets. The standard way for this to play out is for the equity markets to rally and the bond markets to sell-off largely as a way to get money to put into the equity markets. That's not a guarantee, but simply the most logical way for investors to allocate resources during this time.

Bearing that in mind, note the following with the IEF (7-10 year) Treasury ETF:

-- All the SMAs are still heading higher

-- The shorter SMA are above the longer SMAs

-- Prices are above the 200 day SMA

-- Prices moved through the 10 day SMA yesterday, but bounced off the 20 day SMA back through the 10 day SMA.

The IEFs started a rally at the end of July. Since mid-August, the market has been bullishly aligned (SMAs moving higher, shorter SMAs above longer SMAs, Prices above all the SMAs and prices using the SMAs as technical support). However, the Fannie/Freddie deal has really thrown standard analysis for a loop. We'll have to wait and see how this whole thing plays out.