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

by on July 6, 2012 | ETFs Mentioned:

Stocks crept lower yesterday as disappointing ISM non-manufacturing data results put a lid on domestic recovery hopes; the figure came in at 52.1, falling short of the 52.9 analyst estimate as well as last month’s reading of 53.7. In international news, both the European Central Bank and China’s central bank cut interest rates in an effort to spur economic growth in a global environment largely characterized by uncertainty and stagnation [see also 4 Little Known Factors Driving The Price Of Natural Gas].

Investors will keep their attention focused on the homefront later today as the latest employment data hits the Street at the opening bell. As such, the iShares Barclays 20 Year Treasury Bond Fund (TLT) could see a surge in trading volumes if the unemployment rate unexpectedly moves in either direction; analysts are predicting for the rate itself to remain unchanged at 8.2% while nonfarm payrolls are expected to come in at 100,000 versus the previous reading of 69,000 [see also Monthly Dividend ETFdb Portfolio].

Chart Analysis

This ETF has been drifting sideways since recently hitting an all-time high at $130.38 a share on June 1, 2012; notice how TLT has been oscillating between the $124 (blue line) and $127.50 (red line) levels since June 7, managing to bounce off support and retreat as it nears resistance in a fairly predictable manner. Since TLT is now drifting in the middle of the range outlined above, today’s unemployment report should serve as a fundamental price driver that either brings it back to the lower half of the range or bolsters it higher to retest resistance below $128 a share [see also 3 ETF Trading Tips You Are Missing].

Click To Enlarge

From a technical perspective, TLT is undoubtedly in a long-term uptrend, although improving economic indicators may spark another correction for this ETF and bring it back down near its 200-day moving average (yellow line) just as it did in the first half of March of this year [see also ETF Technical Trading FAQ].


If unemployment data paints an optimistic picture for the U.S. labor market recovery, safe havens, including U.S. Treasuries, may face selling pressures as investors jump ship to equities. Likewise, TLT may be in for a rough day if bullish pressures prevail on Wall Street; in terms of downside, this ETF has support at $124 a share followed by the $120 level. On the other hand, another disappointing major economic data release may very well spark the next leg-up for TLT; in terms upside, this ETF has major resistance at $128 a share. 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.