TTT on Interest Rates

In late March we commented in this blog regarding an imminent move in interest rates and the effect this might have on the markets. 

We reiterated this warning in this blog in June, and as is plainly evident the charts and commentary proved very accurate and indeed as we suggested it was not in context with rising rates that the markets fell but rather in tandem with falling interest rates per the ongoing deflation we've been correctly identifying all along, counter to the expectations of mainstream analysts. 

TLT was at its high today 18% above our suggested buy trigger level. 

TBT was at its low today 36% below our suggested sell level.

Now the call for a reversal in rates and a corresponding collapse in bonds is almost universal, which would reverse the above trends, and while we agree that sentiment is extremely bullish for bonds and thus it's time for a correction, the fact is that the markets are technically very bearish as is the economy very weak and as long as this is the case the "flight to safety" of bonds should continue on average, counter to the expectations of popular analysts. 

On August 15th in this blog we suggested we could play the countertrend eventually via purchasing TBT in the mid-$20 range.  Its low today was a little below $30.  Likely it's due to rally while conversely TLT consolidates, but we do not believe that a top in bonds or bottom in interest rates has yet been reached so we'd be sellers of TLT with such generous quick profits on the table but not yet buyers of TBT to speculate on the side of rising rates and possible inflation. 

We'll continue to update accordingly, and if warranted an "official" trade suggestion will appear in a future issue of TREND Technical Trader.