Wednesday, July 22, 2015

Where Are U.S. Treasury Bonds Heading From Here?

The obsession with when Interest Rates are going higher has been one of the most fascinating things to watch as a market participant over the past few years. Economists continue to tell us that rates are going higher, but the market keeps suggesting, as it has for years now, that rates are likely to stay down or even go lower.
Today we are looking at shares of $TLT that represent a liquid exchange traded fund that tracks U.S. Treasury Bonds, particularly the longer end of the curve. First we want a more structural perspective to see where we are bigger picture and then work our way down. Here is a weekly candlestick chart showing prices exploding higher throughout 2014 after Wall Street economists told us they would head lower. This year we have retraced exactly 61.8% of that move to find support near the 115 level. This is a standard retracement and a key support level that we want to watch. From a risk management perspective, I see no reason to be long if prices are below that support since June.
2015-07-21_14-27-12 tlt w
Looking at this tactically, we want to be adding to positions only if prices are above this downtrend line from the April highs and taking profits near 123 which served as support last December and this March. We have a key downtrend line from the 2015 highs and a flat 200 day moving average that suggest fading any strength into those levels.
2015-07-21_14-32-21 tlt d
Here is a short video describing what we are seeing here with a bit more detail:

A Bloodbath Worse than the 2008 Financial Crisis

from Casey Research
Commodities are getting crushed.
The Bloomberg Commodity Index (BCOM), which tracks 22 different commodities, just hit its lowest level since April 2002.
[...] Commodities as a group are now cheaper than they were during the financial crisis.
We told you yesterday that gold hit its lowest price in five and a half years. It’s just one of many commodities struggling right now. The price of coffee is down 27% so far this year… sugar and lumber prices are both down 22% this year… and a barrel of crude oil costs half of what it did a year ago.
Continue Reading at…

WPX Energy Inc (NYSE: WPX)

WPX Energy, Inc., an independent natural gas and oil exploration and production company, engages in the exploitation and development of unconventional properties in the United States. The company focuses on exploiting natural gas reserves base and related natural gas liquids in the Piceance Basin of the Rocky Mountain region, as well as developing and growing oil positions in the Williston Basin in North Dakota and the San Juan Basin in the southwestern United States. As of December 31, 2014, it had proved reserves of 4,360 billion cubic feet of gas equivalent.
Take a look at the 1-year chart of WPX (NYSE: WPX) with the added notations:
1-year chart of WPX (NYSE: WPX)
After its steep decline towards the end of last year, WPX has been trading in an overall sideways move since the beginning of 2015. And during that time, the stock had also created an important level of support at $10 (red). Now that the stock has broken that support, lower prices should follow.

The Tale of the Tape: WPX broke a key level of support at $10. A trader could enter a short position on any rallies up to or near $10 with a stop placed above the level. If the stock were to break back above the $10 level, a long position might be entered instead.

Monday’s Panic Selling In The Gold Market Has Only Occurred 6 Times In History – Price Moves After Each Historic Panic Are Remarkable

After Monday's massive selling pressure in the gold market, today King World News is pleased to feature a piece from one of the greats in the business discussing the fact that Monday's panic selling in gold has only occurred 6 times in history. He also noted that movements in the gold price after each historic panic selloff were remarkably similar. (more)