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

by on August 29, 2012 | ETFs Mentioned:

Equity markets continued to chug along sideways as low trading volumes permeated Wall Street for another session, showcasing investors’ uncertainty ahead of Fed Chairman Bernanke’s speech at Jackson Hole this Friday. The Nasdaq managed to pull ahead of the Dow Jones Industrial Average and the S&P 500 Index for another day as mixed economic news prompted a bullish reaction out of the technology sector. Worse-than-expected consumer confidence data collided with encouraging Case-Shiller home prices, pushing Treasuries and volatility slightly higher while gold inched lower [see also The Ultimate Commodities Survival Kit].

Perhaps the most anticipated event this week aside from Bernanke’s speech is today’s U.S. GDP revision release. As such, our ETF to watch for the day is the iShares Barclays 20 Year Treasury Bond Fund (TLT, B+), which could swing in either direction depending on whether or not the latest growth expectations spark a rally or sell-off for equities. Analysts are expecting for economic growth expectations to come in at 1.7%, marking a modest increase from the previous GDP reading of 1.5% [see also 7 ETFs Yielding 7% Or More].

Chart Anlaysis

This ETF has bounced off its 200-day moving average (yellow line) and appears to be well on its way to resuming its longer-term uptrend. Despite holding above its moving average and not falling below the $120 level, TLT could endure another correction before continuing its march higher for good. Notice how in mid-March of this year TLT declined to its 200-day moving average, around $110 a share at the time; despite holding above support and bouncing higher, TLT turned lower again in early June and came just pennies away from retesting the same level of support [see also 5 Tips ETF Traders Must Know].

Click To Enlarge

All in all, TLT has a history of multiple-bottoms, which suggests that its recent leg-up could welcome profit-taking pressures before it can look to summit resistance past $130 a share [see also 25 Things Every Financial Advisor Should Know About ETFs].


If the U.S. GDP revision sends a wave of worry across Wall Street, bearish sentiment could inspire a rally in the safe havens; in terms of upside, TLT has near-term resistance at $128 a share followed by the $130 level. On the other hand, a bullish reaction to the latest economic growth expectations can very easily knock TLT lower; in terms of downside, this ETF has support at $124 a share followed by the $120.50 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.