The Contrarian: Treasury Bond ETFs

March 22nd at 6:00am by John Spence

Many investors are talking about the recent jump in bond yields and how U.S. Treasury ETFs are set to be toasted by an improving economy and rising inflation.

However, one technical analyst spies an opportunity for short-term traders to go against the crowd with a long position in a Treasury bond ETF. [Short ETFs for Rising Rates]

“The past week has seen the iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) correct back to its 200-day exponential moving average, a level which was last tested in July last year. That retreat was followed by uptrend reassertion,” said Tarquin Coe at Investors Intelligence.

The $3.1 billion bond ETF is down about 5% over the past month. Bond prices and yields move in opposite directions. [Shorting Treasury Bonds with ETFs]

The fund, which has a 12-month yield of 3.6%, sits at its most oversold level in over a year, and is also at lateral support at $110 a share, Coe said.

“Longs are worth considering with a target back up to the top of the seven month range at $125. A sustained break of $110 could be used as a stop-loss,” the analyst wrote in a newsletter.

iShares Barclays 20+ Year Treasury Bond Fund


The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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