It's early to say for sure but I'm watching for a potential golf club pattern in treasuries. Here's a chart of TLT (20yr treasury ETF) flipped upside down using the "flip" feature of my charting software:
Notice the curvature of the top of the pattern. The bottom is still extending with spikes. I would watch for something like this to form:
I can't say for sure how many spikes we'd get. I have two here but it could only be one. The thing to watch for is the top to flatten out and form a resistance line (support upside down). On the downside a flat pattern is ideal although it's not unusual for the last dip to be extra low. If the pattern holds, then TLT should shoot off (down) according to the pattern. This would not be unexpected given that I believe the market will stage a significant rally soon (after touching 106 I'm still believing).
Wednesday, September 7, 2011
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