Bonds ETFs...


The market seems a little top heavy. Since my last post, the SPY's and DIA's have made little gains, despite increases in volume. This market seems as if it can't push past the recent highs set this past May. Even with "quadruple witching" this past Friday, the market has not sustained the momentum which it would need to burst to new highs. With bearish divergences in many sectors and indices, be careful on the equity side as there might be more room to the downside.

With this said, where do we look to find ALPHA. One area might be in the bond ETFs. Take a look at the iShares charts above. You will see that recent downtrends on all 3 charts might be reversing towards the upside. In the YELLOW OVALS, you will also notice a positive Chaiken oscillator and an RSI moving higher from it's months long decline. All of these signs are very bullish for these ETFs on a weekly basis. If the market looses steam as indicated by the technicals, money should be flowing into bonds as a safe haven and could increase in value. Also, increasingly signs of a softer landing in commodity prices, easing of interest rates by the Fed, and tensions abroad might lend to higher prices in bonds. While the Consumer Staples has had a nice price appreciation already (see past posts), this idea might be an interesting side-play to any equity short play being taken now.

Just to keep in mind..while purchasing the actual US treasuries might be wise, the ETFs offer a way to purchase this market while keeping money within your equity account. This might be a better way to trade this "move". If the equity market does rally, cash is more easily transferable to the equity long side.  ¶ 9:07:00 PM 0 comments