Bonds approaching Death Zone…..again

The death zone is the name used by mountain climbers for high altitude where there is not enough available oxygen for humans to breathe. This is usually above 8,000 meters (26,247 feet). Most of the 200+ climbers who have died on Mount Everest have died in the death zone. For Bonds that level is a price of 115.25 in the 20+ year Bond ETF, $TLT.

Bond prices move opposite to yields so prices sinking below this level risk a strong move to the upside for Bond yields and faster, further decline in Bond prices. The chart below shows that prices have remained in a range over this level since dropping from a higher range at the end of January. Since the beginning of September prices have been moving lower in that range and are now approaching the bottom at 116. Below that there is a little room to the Death Zone at 115.25 from July 2015.

Momentum is making new lows as the price continues to fall. The RSI is nearing oversold territory but the MACD is only barely negative, with lots of room to move lower. As I write in the pre-market the price is off further and. It is outside of its Bollinger Bands® so there may be an oversold bounce in the short run. What happens after that will be telling and may bring forward the long talked about Bond correction.

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