The Bond Retest

    Remember back when you took the SAT’s? Some of your friends did really well, scoring near 800 on each section, and moved on to other things. But others had that one section that was in the 500’s. For these (me included) we took the SAT again. There was no penalty to do this. No stigma attached.

US Treasury Bonds are going through this process right now. The price of US Treasury Bonds fell below a 30 year rising channel back in September. This also brought them below their 100 month SMA. The chart below shows the detail.

Now as December is closing out, that price has made a comeback and it is retesting the trendline break. This happens often with the price action of securities, a break down and retest. It is the next step that determines the action to take. A push back through the trendline and into the channel would be considered a failed breakdown and then continuation of the trend higher would be considered.

But a rejection and turn back lower would be considered a firm confirmation that the breakdown will continue. It may take a few months for this to play out, but hey, after a 30 year trend that is not much time to wait.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.