{"id":21814,"date":"2024-05-23T07:30:42","date_gmt":"2024-05-23T11:30:42","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21814"},"modified":"2024-05-23T07:30:42","modified_gmt":"2024-05-23T11:30:42","slug":"the-bond-markets-moves-could-catch-you-off-guard","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/the-bond-markets-moves-could-catch-you-off-guard\/","title":{"rendered":"The Bond Market\u2019s Moves Could Catch You Off Guard"},"content":{"rendered":"

If you feel that stocks are expensive these days, you’re not alone.<\/p>\n

The S&P 500 and Nasdaq both broke out to new all-time highs on May 15.<\/p>\n

The Dow Jones Industrial Average breached 40,000 points for the first time on May 16.<\/p>\n

And what about the meme stock frenzy? Between May 10 and May 14, GameStop rallied an insane 220%.<\/p>\n

All of a sudden it feels like it’s 2021 again…<\/p>\n

But there’s one corner of the market that’s been quietly going about its business.<\/p>\n

This isn’t a flashy market. It’s certainly not something that’s going to get the meme stock gamblers all hot and bothered…<\/p>\n

But it’s a market that’s undervalued right now. And in these current conditions, that’s a rare thing.<\/p>\n

I’m talking about bonds. Specifically, the iShares 20+ Year Treasury Bond ETF (TLT).<\/p>\n

My analysis tells me that bonds are due for a big move. And it might just catch a lot of people off guard.<\/p>\n

Let me explain…<\/p>\n

Preparing for the Upside<\/h2>\n

The main driver for the price of bonds right now is inflation expectations.<\/p>\n

Simply put, if the market thinks inflation is falling and the Fed will cut rates sooner than later, the value of bonds should go up.<\/p>\n

It works the other way around also. If the market doesn’t think rate cuts are coming soon, then the value of bonds will fall.<\/p>\n

And it looks to me as though the bond market certainly expects the value of bonds to rise dramatically in the near future.<\/p>\n

Let’s look at a chart of TLT below so you can see what I mean.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

From October 23 to December 28, TLT rallied over 22%. This move higher is likely the first leg of a new bull market in bonds.<\/p>\n

Following this strong move, TLT pulled back 13%, eventually finding a bottom on April 25.<\/p>\n

The pullback in TLT traced out a textbook bull flag (two blue lines). Notice how the pullback remained contained between parallel lines.<\/p>\n

<\/p>\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<\/p><\/div>\n<\/div>\n

<\/p>\n

This should have been a warning to bond traders that eventually, we would get a breakout of the upper boundary of the flag pattern.<\/p>\n

That breakout took place on May 15. What follows next should be a strong move to the upside that roughly mirrors the rally we saw in late 2023.<\/p>\n

That gives us a price target of approximately 106.59 in TLT. That’s about where TLT was trading back in May 2023. I’ll keep an eye out to see how this scenario plays out.<\/p>\n

Happy trading,<\/p>\n

\"Signature\"<\/p>\n

Imre Gams
\nAnalyst, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

This undervalued market is due for a big move, here\u2019s what\u2019s in store\u2026<\/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-21814","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21814","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=21814"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21814\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21814"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21814"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21814"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21814"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}