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TreasuriesHaveEntered“Autumn2008”Mode
I’vewrittenextensivelyabouthowUSTreasuriesaretreatedasasafehavenwhenthingsarenotwellintheworld.Idothinkthatatsomepointthiswillend(andtherewillbeaflightfromtheDollar),butrightnowTreasuriesremainthe“goto”placeforinvestorswhentheywantsafety.Becauseofthis,Treasuriesrallywheneverinvestorsgetspooked.Onthatnote,IwanttopointoutthatTreasuries(blackline)haveremainedelevatedthroughoutthelastmonth,despitestocks(blueline)rallying.Remember,thebondmarketisamuchmoresophisticatedmarketthanthestockmarket(it’salsotwicethelatter’ssize).Sothefactthatbondsdidn’trolloverwhenstocksralliedtellsusthatthe“smartmoney”isspookedanddoesn’ttrustthestockrallyatall.Indeed,whenyoulookatalong‐termchartofUSTreasuries,somethingVERYsignificantjusthappened:
 
Forthelastthreeyears,US30‐YrTreasurieshavebeentradinginaclear‐cutrange(theexceptionbeingthespikethatoccurredduringtheFinancialSystemCrashinlate2008/early2009).SoitisextremelyandImeanEXTREMELYsignificantthatTreasurieshaverecentlybrokenoutofthisrange.Evenmoresignificantly,theformeroverheadresistancelineofthelastthreeyearsisnowactingassupport.
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