E Bond Bear Market?

10-Year yields are testing the 200-Month MA and the trendline dating back to 1981. Yields likely reached a generational low in 2016. A breakout above the trendline would support rising yields and a multi-year bear market in bonds.

 

-TLT LONGTERM CHART- Here is the multi-year trendline in TLT (20-year bond ETF). Prices have been in a steady uptrend. It looks like prices peaked in 2016 and we may see a test and potential breakdown below the red trendline in 2019. Note how the 200-week MA stopped most corrections (green arrows).

 

-TLT CLOSEUP- The blue arrows in the weekly chart represent yearly cycle lows. It appears the last cycle bottomed in February. Prices are rolling over, and it looks like we have a failed or left translated cycle. Meaning the cycle probably peaked and prices may continue to drop until the next yearly cycle low (2019). Notice also that the 200-week MA is slowly rolling over and prices are significantly below it. It looks like TLT is starting a new bear market. The next level of support arrives at the multi-year red trendline. Below that and a new bear market in bonds will be confirmed. The next yearly cycle low should arrive between July and November of next year. That could correspond with a top in the stock market.

 

-TBT- The weekly chart of the ultra-short 20 year bond fund (opposite TLT) appears to be breaking out. An investor may consider buying TBT long-term to play a potential multi-year bear market in bonds.

 

Long-term cycles in bonds typically last 20+ years. After yields peaked in 1981 bonds entered a 35-year bull phase. I believe that ended in 2016. Bonds are now likely entering a multi-year (perhaps multi-decade) bear market.

Disclosure: None.

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