Treasury Tuesday

I’m going to try a new approach to posting and see if I can keep it up. The WSW posting gradually got so large that it takes a fair amount of work to make one. That makes me reluctant, which leads to them only happening once every few weeks. (Not all THAT much of a problem unless you are trying to day trade or trade daily / weekly swings). For longer term investors that’s not too bad, but it isn’t often enough to “call entry and exit” moments adequately. I’ve done some fast notices under “Economics and Trading”, but they have been a bit sporadic. The solution? Perhaps having one topic per day of the week, then the WSW becomes more a summary of the prior postings. We’ll see. It maybe that trying to do this daily falters on other time demands, or it might work out fine.

In particular, the “Momentum” part of the WSW posting really needs a “new sample” every so often that then is tracked for weeks or months. It isn’t well suited to a periodic “overturn” each week. So a new posting with a new list each week, that then stays for anyone who is trading them to track their choices, that makes more sense. So we’ll be having a “Momentum Monday”, a “Treasuries Tuesday” (that looks at bonds), an “Energy Humpday” on Wednesdays (as that is when the weekly oil reports come out), a “Thin Thursday” for those things that are more minor segments of markets, and “Frugal Friday” looking at value investments and bottom fishing in particular. Then there is “Saturday Stuff Day” for commodities and Ag, cash and currencies. Sunday becomes “Realestate Rest Day”. Somewhere along the line we have a WSW summary.

We’ll see how much time it takes and if I have the time and discipline to keep it up.

With that said, here is the first “Treasury Tuesday” posting.

Charts here come from Bigcharts.com. You are encouraged to go there, learn to set the controls (on the left hand side) yourself, and make your own charts. It is a skill well worth developing and then you don’t need to depend on me to make a posting every day.

“Static” Chart of bonds on the day of this posting (live chart follows). Click on it for a larger easier to read version. On the day of posting the live chart below will match and is easier to read without the ‘click through’.

Bonds 8 May 2012 Static Chart

This chart looks at TLH as the main ticker, so a medium maturity fund. You can see how shorter maturity bonds don’t move as much as longer maturity (in both directions).

As scares about Municipal Bankruptcy comes and goes, MUB bounces.

LQD shows how corporate bonds stack up against government treasuries.

TIP has an ‘inflation protection’ feature while WIP is the same thing but in currencies other than US Dollars.

Here we can see that TLH has crossed over the Simple Moving Averages and very briefly almost touched them from above. That’s the “be in” signal. (Traders could have entered earlier on the MACD crossover to “Blue on top” back in March) MACD is now “above zero” so things are in a rising trend over the time period of the MACD, and the lines have ‘merged’ which happens when a trend is steady. Looking at RSI, you can see that it was “near 20” in March (the “first call”) and then had a ‘higher low” at the start of April (the “pile in”) just about the same time MACD had that crossover. You will note that about the same time DMI goes to “Blue on Top” and the price takes a ‘gap up’. Many folks follow these indicators and some computer driven trades as well. It’s best to be a touch ahead of those “gap moves” (that often follow news events), but a bit riskier, while it is safer (though less gain) to be a bit slow on the entry and early on the exit.

If you look at the black TLT ticker line, it looks continuous at that point, but in fact had an even larger gap up. Notice, too, that while it’s more volatile and makes better trades to be in TLT, the more steady gain is in TIP (most of TLT rise was in that one spectacular jump back in August / September. This also shows how the “fast ticker” can call a play ( TLT spike up) and you can still get on board later in the slower tickers (MUB, TIP, IEF, LQD).

In general, this chart is saying it is time to be in bonds (and has been for a month or so).

TLH  -  10 to 20 Year US Treasuries
AGG  -  Aggregate of many maturities bond fund.
SPY  -  S&P 500 benchmark
MUB  -  US "AMT-Free" Municipal Bonds.
IEF  -  7 to 10 Year US Treasuries
TIP  -  Treasury Inflation Protected Securities TIPS
LQD  -  "High Quality" aka Liquid Corporate Bonds
TLT  -  20+ Year US Treasuries
WIP  -  World Inflation Protected Securities

Colors on this chart will be different as I’ve got SPY on it as a stocks vs bonds comparison. Typically you want a mix of both, or to swap between them (low involvement investing vs trading). Notice that when SPY ‘kneed up’ in October was when Bonds headed down.

Live chart of selected bonds

Bigcharts Bond Chart Example comparing S&P 500 with TIP (Treasuring Inflation Protected Securities ), WIP World Inflation Protected Securities, and TLT Long Duration Treasuries (all ETFs).

Remember, too, that under the “Stock Charts” category (right side of this page) there are a variety of selected charts with particular collections of tickers in them. Including this one for bonds and currencies:

https://chiefio.wordpress.com/2011/12/20/bonds-overview-charts/

which includes longer descriptions of the tickers here, along with more and different tickers including some in other currencies.

Charts here may be a bit more variable from week to week as things of interest pop up. Right now, the non-US bond markets are not very interesting.

Some Links

A variety of ETFs, including bond ETFs, are at the iShares site. Choose the particular bond fund off of the “fixed income” tab:

http://us.ishares.com/home.htm

There also exists a variety of bond funds at the SPDR site

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