Friday’s ETF Chart To Watch: Barclays 20 Year Treasury Bond Fund (TLT)

by on June 15, 2012 | ETFs Mentioned:

U.S. stocks managed to rally higher and close in bright green territory yesterday despite an overwhelming number of looming uncertainties. For starters, weekly jobless claims came in worse than expected as 386,000 people had filed for unemployment benefits versus the estimated 376,000. The current account deficit also grew, coming in at $137 billion versus the previous reading of $119 billion. Equities charged higher as hopes for additional stimulus from the Fed grew given the concerning outlook at home coupled with a brewing debt crisis in the eurozone [see also Europe ETFs: The Good, The Bad, The Ugly].

Ahead of the upcoming Greek elections this weekend, investors will have one more key economic release to digest on the homefront. The University of Michigan consumer sentiment index is slated to come out later today after the opening bell, which makes the iShares Barclays 20 Year Treasury Bond Fund (TLT) our ETF to watch for the day. This ETF may experience volatile trading as investors either jump away or into “safe haven” Treasuries depending on the report. Analysts are expecting for the consumer sentiment index to come in at 77.8, a slight drop-off from last month’s reading of 79.3 [see also How To Play A Treasury Bubble With ETFs].

Chart Analysis

This ETF has drifted sideways all week as mixed data domestically coupled with looming threats from Europe have gone on to create a muddled global economic outlook, paving the way for range-bound trading across asset classes. TLT bounced off its 200-day moving average last time in early April of this year as eurozone debt woes resurfaced (again). This ETF appears to be holding support now at $125 a share as it gears up to charge ahead of its all-time high at $130.38 a share on June 1, 2012 [see ETF Technical Trading FAQ].

Click To Enlarge

From a fundamental perspective, TLT is poised to continue higher given the growing hopes for more stimulus measures later in the month. If the Fed surprises markets, however, and decides not to embark on more quantitative easing, selling pressures may very well drag this ETF back to its 200-day moving average, or perhaps even lower [see Euro Free Europe ETFdb Portfolio].


If confidence data paints a concerning picture at home, TLT may very well have the wind at its back on the day. In terms of upside, the first potential resistance level for this ETF comes in at $130 a share just below its all-time high. On the flip side, an improving outlook may spark a rally for equities instead. In terms of downside, the first level of support for TLT comes in at $124 a share followed by the $120 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.