TLT Update

I meant to include TLT (20+ year bond fund) in the last update, I had the charts prepared and just forgot to get them in there.

In any case, I believe last week I posted a chart of the inverse relationship we have seen , especially of recent between bonds and equities, specifically TLT and it's inverse relationship with the SPX especially recently. With TLT moving down over the last 3 weeks or so, you may recall that last week, I expected TLT to start to bounce soon, that started today.

When bonds move up, yields move down and as you know, yields are one of our Leading Indicators as they tend to pull equity prices toward their direction, so again, a move up in bonds/TLT means down for yields and last week I felt strongly TLT had hit a bottom and was ready for an upside reversal. This post is a day earlier and deals with the TLT signals looking like an upside reversal was on its way, TLT 20+ Year Bond Fund / Leading Indicator... and this post is more of a broad leading indicator post with an emphasis on TLT and is the place you can see it's correlation to the SPX and how it works as a leading indicator, Leading Indicator TLT Follow Up / Market Update

Today TLT is up, it is not out of the range area yet, but it has some encouraging near term charts and I say near term because we had some nice longer term TLT longs last year as bonds outperformed stocks, but I think that longer primary trend is no longer a ride I'm comfortable with as some of those longer term TLT charts have really fallen apart, but that's not where my immediate interest lies...

 TLT daily chart, note the rate of change has gone from down to lateral, more of a basing scenario.

The intraday 1 min chart looks good and looked good so I'm not surprised TLT is up today, but this is not the extent of what is so interesting about TLT, especially if you know what the SPX vs. TLT correlation looks like.

It's charts like this 10 min and a VERY fast, VERY strong leading positive divergence, but this is not even the extent of it...

This 60 min chart had a relative negative divegrence sending TLT lower, it's a respectable divergence, especially on a 60 min chart, but a relative divergence is a much weaker form than a leading divergence. Now, look at the right side of the chart and the 60 min leading divergence and the very short period in which it went ballistic. When I compare divergences, I'm seeing what looked like the planned, slow process of sending TLT lower, but not especially emotional or motivated, they took their time, it doesn't seem like they distributed TLT very hard (enough to do the job, but not a strong signal), then looking at the right side of the chart, it's almost as if someone is a bit more serious about getting back in to TLT a lot more quickly which is interesting considering Igloo/Chimney price patterns.