{"id":16729,"date":"2020-11-04T07:30:32","date_gmt":"2020-11-04T12:30:32","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=16729"},"modified":"2020-11-04T07:30:32","modified_gmt":"2020-11-04T12:30:32","slug":"this-drop-might-be-tough-to-handle","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/this-drop-might-be-tough-to-handle\/","title":{"rendered":"This Drop Might Be Tough To Handle"},"content":{"rendered":"

U.S. Treasury bonds still look dangerous.<\/p>\n

It’s been almost a month<\/a> since we last looked at the so-called “risk-free” Treasury bond market. Back then, we noted that the iShares 20+ Year Treasury Bond Fund (TLT) was oversold and could bounce a bit in the short term. But, the intermediate-term picture looked bearish<\/a>. TLT had more room to fall.<\/p>\n

That’s exactly what happened… TLT bounced higher for a few days. Then, it rolled over and fell to a lower low.<\/p>\n

And, by the look of the following chart, there’s still a lot more downside risk in the Treasury bond market…<\/p>\n

\"\"<\/p>\n

TLT has been in a steady downtrend – with a series of lower highs and lower lows (the red lines on the chart) – for the past several weeks. It now looks like TLT is headed down to test the support<\/a> line of the downtrend channel, which also lines up with the blue support line from the early June low (top blue line).<\/p>\n

It’s reasonable to expect some sort of bounce to occur once TLT tests that support level. But, unless TLT can bounce back and make a “higher high” above $160, the downtrend will remain intact. And, that sets up a very dangerous situation for Treasury bonds on the next move lower.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You see, if TLT breaks below support at $155, then the next support line is all the way down at the March low near $143 (the lower blue line). That’s almost 8% below where TLT closed yesterday.<\/p>\n

An 8% drop might not seem that bad for tech stock traders who are used to seeing their positions whip around in double-digit moves on a daily basis. But, for the “risk-free” investment crowd, an 8% drop in what’s supposed to be a “safe” investment might be tough to handle.<\/p>\n

Keep in mind, the yield on a 30-year Treasury bond is 1.6%. So, it’ll take five years’ worth of interest payments to make up for an 8% drop in principle.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

Do you think the Treasury bond market will be bouncing higher? Or, will the current political events cause it to go lower, creating a significant drop?<\/p>\n

Let us know your thoughts – and any questions you may have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

U.S. Treasury bonds still look dangerous…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-16729","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/16729","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=16729"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/16729\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=16729"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=16729"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=16729"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=16729"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=16729"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=16729"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=16729"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}