The most recent Daily Sentiment Reading (DSI) for Bonds is 12!
Purely from a technical perspective, it is not usually a coincidence when TLT (the inverse of TBT) presses into extreme oversold condition right about the time TBT hits its optimal upside target off of its June-Sept base formation while also challenging the horizontal 200-Day EMA, now at 35.06.
Last Thursday’s high at 35.07 tested, but was not able to hurdle, the 200-Day EMA.
TBT has backed away from the EMA amid oversold condition in bonds, despite last Friday's first estimate of Q3 GDP (+2.9%).
At this juncture, my sense is that a counter-trend rally in TBT (upmove in YIELD) is nearing exhaustion -- at least for the near-term -- which might just extend into next week's presidential election.
Bottom line: My sense is that the U.S. economy is increasingly vulnerable to a recession and/or a flight to safety into, and immediately after, the election -- especially if the Fed makes a dreadful policy error.
