US bonds fell to potential support, just in time for S&P500 to look shaky

US bonds continued their fall through Friday afternoon, having gone past my queried C=A level along with the .50 retrace. As you can see on my daily TLT chart, as of the end of the afternoon TLT had poked the .618 retrace and closed just above it.

I'm including a weekly chart of TLT, with just my standard set of indicators. What stands out on this one is that TLT may also be receiving support at its Bollinger Band midline on this weekly chart.

And just in time! as the outlook grows more bearish for equities (see my monthly chart of the SPX, including the closing price Friday). Now, I've grown more pessimistic on the idea of bonds presenting a new surprise high, mainly because the drop did exceed the potential C=A level. And the indicators don't look great either. But I am optimistic that the level that TLT tested on Friday should provide a good tradable rally.

From a fundamental perspective this would also make sense if equities do make a new plunge downward. Although it will be interesting to see what will happen with the bonds charts just during this week, if we do see a sharp spike higher in gold to the ~1000 level as forecast in the ChartsEdge cycle chart and discussed in my post earlier today regarding gold. But if a rally like that in gold also turns out to be the larger "B" wave I described in that post, followed by a larger "C" wave down in gold, then it will also be fascinating to see what happens to the prices of these bonds.

Still - let's not get ahead of ourselves. Given the situation, with a potential spike in gold and the obvious volatility that bonds have just experienced, anyone playing a potential bounce by going long in TLT/bonds needs to use good stop loss protection (I'm thinking very close under Friday's lows), just in case bonds and TLT aren't quite ready to rally yet. One possibility is that bonds either finished or have yet to finish a third wave down, or even need to do a 4th wave consolidation briefly and then a fifth wave down, while gold finishes an upward move. And then, any rally in bonds may prove to be a bear market rally, whether a 4th or B wave, or even a nice high wave 2 pullback upward. (Meaning if bonds have indeed initiated the opening movement in a trend reversal off the highs, then a wave 2 pullback upward could retrace perhaps .618 of the ground lose during the move down.)

Here are the charts. First, the daily and weekly charts of TLT:



And next, my monthly chart of the SPX (no new markings needed (yet, anyway) on this one) - I already discussed in my previous posts here, yesterday and today, the potential for a down wave in equities: