No one said it was going to be easy. But this is ridiculous. In order to stay on the trail of the financial markets, the powers that be have one word of advice: FOLLOW the mainstream “experts.”
What they don’t tell you is: The path the “experts” blaze has more switchbacks than San Francisco’s famed Lombard Street.
Case in point: The recent news reports regarding the U.S. Treasury Market. On April 8, former Federal Reserve Chairman Greenspan took a front row seat on the bad news bandwagon making its way through U.S. economy, adding: “This is the worst credit crisis in 50 years,” the housing recession is deepening, and losses from the whole imploding mess are about to get much worse.
YET -- somehow, one popular news source found reason to cheer. “Treasuries fall on speculation the Fed…[is] growing reluctant to keep cutting interest rates. I’m bearish on Treasuries. The outlook for the economy is optimistic.” (Bloomberg)
The next day, Greenspan’s message was confirmed: The International Monetary Fund revealed that losses from the credit crunch could near the $1 trillion mark. All previous hopes were now dashed. “Treasuries gained as investors added to bets for Federal Reserve interest rate cuts. I’m bullish on the Treasury rate…” (AP)
Then again, the usual suspects have another change of heart: “Treasuries fall as growing confidence the Federal Reserve has done enough to limit an economic slowdown dampened demand for government debt. The market has sensed the worst has passed.” (Bloomberg)
And again: “Minutes from the 18 March FOMC meeting painted a more pessimistic view of the economy…and bolsters our view of a 50 basis point cut at the end of the month.” (Lehman Brothers’ economists)
Pardon me, but a pack of trained bloodhounds couldn’t steer their way through that course; the direct result of pinning a market’s movements to outside events -- which are constantly changing.
Now for the alternative: Identifying the internal wave structure at large in a market’s price chart, one that is both calculable and consistent. FACT: Treasury yields have been falling steadily since ending a nine-month long winning streak on June 12, 2007.
And, in the Short Term Update on June 13, 2007, our analysts presented a compelling close-up of the iShares Lehman 20+ YR T-Bond Fund: TLT, and wrote: “In sum, it appears that the force that have resulted in the steep bond decline are now turning and should result in a relief rally in the foreseeable future.”
Flash ahead to today, and the April 7 Short Term Update reveals whether the multi-month slide has finally come to an end.