Sunday, August 22, 2010

Treasury Index -- target update

In a T&V letter dated March 1, I gave a target of ~180 on the benchmark Dow Jones CBOT Treasury Index and included a chart showing how the index would approach that level. I just found that same chart in one of my chart books. Here it is:



I've never been that great at "timing" markets, but while the squiggles I outlined don't match up perfectly with the actual turns in the index, the general direction of the Treasury market has been encouraging, so far.

Yeah, I was planning to write a big piece on the bond market, but poking around the Net I see that the rhetoric (from both sides) has heated up significantly of late. So I just don't see much point in entering the fray here. Oh, hell, one comment won't hurt.

Are bonds in a bubble? Fuckin' right they are, and had you been reading this site in summer/fall of 2008 you'da been hip to the bubble a hell of a lot earlier than everyone else.

But the Bond Bubble is nowhere close to a top. When the 10 Year is yielding like .007 then we'll start looking for a top in bond/note prices.

And as you can see from the chart above, we are only about halfway through the current rally. But there should be at least one decent interim correction before we hit the target.

But I am not recommending people jump into long positions right now. We don't chase things here, remember?

Treasurys = HOLD