{"id":19712,"date":"2022-05-11T07:30:09","date_gmt":"2022-05-11T11:30:09","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19712"},"modified":"2022-05-11T07:30:09","modified_gmt":"2022-05-11T11:30:09","slug":"investors-must-now-face-a-new-reality","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/investors-must-now-face-a-new-reality\/","title":{"rendered":"Investors Must Now Face a New Reality"},"content":{"rendered":"

There haven’t been many places for investors to hide over the last several weeks…<\/p>\n

Even bonds – traditionally considered a safe haven – have been falling right along with other risk assets like stocks and cryptocurrencies.<\/p>\n

It’s mostly due to the bond market’s fears regarding inflation.<\/p>\n

With the Fed in the early stages of a rate-hike cycle, investors have been forced to reckon with a new reality where low interest rates are a thing of the past…<\/p>\n

First, it’s important to note that the higher the yield, the lower the price of a bond and vice versa.<\/p>\n

So, with the Fed set to raise rates over the next several committee meetings, bonds have been selling off quickly.<\/p>\n

But based on my analysis, I believe Treasury bond traders may have gotten ahead of themselves and that the bond market may be due for a relief rally.<\/p>\n

That’s why today we’ll be looking at the iShares 20+ Year Treasury Bond ETF (TLT).<\/p>\n

TLT is an exchange-traded fund (ETF)<\/a> that tracks the investment results of a basket of U.S. Treasury bonds with remaining maturities greater than twenty years.<\/p>\n

(If you’d like to learn more about this ETF, just click the link here<\/a>.)<\/p>\n

Now, let’s look at a price chart of TLT…<\/p>\n

<\/p>\n

\"chart\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

<\/p>\n

There are four key elements to this chart:<\/p>\n

    \n
  1. \n

    Key Support Level from October 2018 (red line):<\/strong> This support level comes in at 112 and is a major swing point in TLT. <\/p>\n

    After putting in this low back in October 2018, the market went on to rally to 171 – a 52.68% move. <\/p>\n

    The market is now pressuring this multi-year low, and I’m interested to see if bulls<\/a> can defend it.<\/p>\n<\/li>\n

  2. \n

    Multi-Year Trendline Going Back to 2007 (straight blue line):<\/strong> This support line connects bottoms from July 2007 and January 2011. <\/p>\n

    It comes in around 107… right below that major support level of 112.<\/p>\n<\/li>\n

  3. \n

    Most Oversold RSI Reading in the History of TLT (orange circle):<\/strong> The Relative Strength Indicator (RSI)<\/a> is currently giving a reading of 21.56 – the most extreme oversold reading in the history of TLT. <\/p>\n

    Meaning that bearish<\/a> momentum is likely reaching a peak.<\/p>\n

    The combination of two important support levels and this extreme RSI measurement is strong technical evidence to start looking for a bounce in the bond market.<\/p>\n<\/li>\n

  4. \n

    9-Period <\/strong>Exponential Moving Average<\/strong><\/a> (EMA – blue squiggly line): <\/strong>The 9-period EMA is a short-term trend.<\/p>\n<\/li>\n

    If we do get a bounce in TLT, this EMA can serve as a potential target. Right now, the 9-period EMA is around 122.<\/p>\n<\/ol>\n

    <\/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

    <\/p>\n

    To clarify, TLT isn’t out of the woods just yet.<\/p>\n

    If we do get a bounce, it’s more likely to be a bear market rally. Meaning that after the bounce is finished, we’ll eventually get fresh new lows.<\/p>\n

    But even in a trending market, prices can only run so far before temporarily running out of steam. And this current sell-off in TLT looks like it’ll need to take a breather before trending again.<\/p>\n

    That’s what makes TLT so interesting right now.<\/p>\n

    Targeting the 9-period weekly EMA would give us a potential move of about 7% from current levels… not bad for a short-term trade.<\/p>\n

    Happy trading,<\/p>\n

    Imre Gams<\/p>\n

    Analyst, Market Minute <\/em><\/p>\n

    P.S. <\/strong>With the recent market volatility, being a buy-and-hold investor is a thing of the past. Now, it’s crucial to quickly get in and out of a trade to secure your gains.<\/p>\n

    That’s why tonight at 8 p.m. ET, Jeff Clark will reveal his most reliable trading strategy<\/a> that could double your money dozens of times in a matter of days or even hours. Jeff doubled his money in just 45 minutes.<\/p>\n

    It’s all due to a market phenomenon that’s guaranteed to happen starting today. This opportunity to secure your retirement (or make some extra cash) won’t last long. So, click right here to reserve your spot<\/a>.<\/p>\n

    <\/p>\n

    Reader Mailbag<\/h2>\n

    Will you focus more on the bond market now that interest rates are set to rise? Or do you usually avoid bonds? <\/p>\n

    Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    Why we may be due for a relief rally. <\/p>\n","protected":false},"author":55,"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":[76],"newsletter-type":[],"ticker":[],"class_list":["post-19712","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19712","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\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19712"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19712\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19712"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19712"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19712"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19712"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}