TLT 20 Year Bond ETF Daily Chart Inverted H&S

TLT daily chart with updated inverted H&S (head and shoulders) patterns. The tighter pink H&S shows an 88 head and 92 neck line for a 96 target. The neckline was pierced to the upside placing the inverted H&S in play and as would be expected, price comes down to back kiss the neck line after the breakout before heading up to the target. But, after the red line negative divergence spanked it down to the neck line for the back kiss, price collapsed back down thru the neckline, negating the pink H&S.

So now TLT places a new green inverted H&S pattern in play using the March high as the new neckline. Thus, using easy whole numbers, head is 88 again, neckline is now 94, so new target is 100. The vast majority of traders now believe inflation is here to stay and yields will run higher from here out (bond prices lower, the chart is bond prices). This directly conflicts with the inverted H&S patterns shown above which target higher prices which are actually lower yields.

In general, moving forward, expect more of a sideways move in yields for the months ahead into 2012 which means the inflation talk is way overdone. Targets of 96-100 remain for TLT moving forward. If the inverted H&S targets are satisfied, it means that traders will seek safety in treasuries in 2011, thus, equities would be expected to move down with an asset relationship of bond price up (yield down)=equites down. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.