Why I BackTest and the TLT

It is no secret that I like to back test every market observation that I have.  I might not show all the data in these columns because most readers probably aren't interested in the details, but it would be rare for me to make a statement or a trade for that matter that wasn't grounded in the data.  I have been doing it this way for over 10 years - observing, writing code, and testing.

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TLT: Less Constructive

It was only 10 days ago that I was constructive on i - Shares Lehman 20 plus Year Treasury Fund (symbol: TLT).  However, the technical picture has deteriorated, and the intermarket bond model is starting to weaken.  A full fledged breakdown has yet to occur, but the recent breakout is looking more like a fake out.  And this should be concerning.

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TLT: Still Constructive

When we last looked at long term Treasury bonds, it was on March 16, 2011, and I stated that "the technical and fundamental picture are both positive for higher bond prices."  The fundamental bond model that I have developed is based upon intermarket data, and this model is still constructive on bonds although there has been a wobble or two this week.  The technical picture is weak as well as prices have faltered but not broken our key levels.  This article will be a review of the technical picture. 

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Long Term Treasury Bonds: Very Positive Backdrop

When I last looked at long term Treasury Bonds (click here and here), I stated the following:  

"While the bottom for TLT (or top for TBT and yields) appears to be in, it is not clear whether this will lead to a sustainable move that would cause price to break the down sloping trend line seen in figure 2.  My hesitation in making the call is my (yet to be presented) intermarket bond model.  This model is still bearish on bonds, but it is not unusual for it to lag the technicals at this point.  If the model turns bullish on bonds while the technical set up is developing, then I will have greater confidence in the sustainability of this price move."  

At the end of last week, the inter market bond model has turned bullish on bonds.  The fundamental and technical picture are now supporting a higher move in bond prices.

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TheTechnicalTake: TLT

It is my belief that we have seen the high in long term Treasury yields at least for a while, and I expressed this opinion in yesterday's article on Treasury yields.  Today, I thought it would be instructive to look at the bullish technical patterns developing in the i - Shares Lehman 20 plus Year Treasury Fund (symbol: TLT).

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