Exchange traded funds tracking short-term U.S. Treasuries have fallen recently with investors abandoning safe havens for riskier assets, but one technical analyst thinks the bond ETFs are due for a bounce.
Although U.S. bond markets were closed Monday for Columbus Day, Treasury ETFs were trading along with stocks.
The iShares Trust Barclays 1-3 Year Treasury Bond Fund (NYSEArca: SHY) traded sharply lower Monday before erasing the entire loss.
The $9.8 billion ETF was “finding support today from rising channel support drawn up from the April 2011 low,” said Tarquin Coe at Investors Intelligence.
ETFs often trade while their underlying markets are closed. [Treasury ETFs Tumble]
The defensive ETF looks oversold with its 14-day Relative Strength Index (RSI), a momentum indicator, at its lowest level since February, the technical analyst wrote in a newsletter Monday.
“The iShares Barclays 1-3 Year Treasury Bond is one of the least risky investments that can be made. Given the short duration and low yields, we view this as a substitute for a cash account or CD at a bank,” Morningstar says in a profile of the ETF.
iShares Barclays 1-3 Year Treasury Bond
Full disclosure: Tom Lydon’s clients own SHY.