Quick look at bonds and the dollar

Bonds as indcated by TLT and the dollar both had a good day today. The dollar touched just above and then closed at its 13-day exponential moving average, which interestingly is also a retest of the .382 retrace level that it had dropped under in the plunge last week. It's also just slightly under its 20-day exponential moving average. If the Elliott Wave alternative idea of a diagonal wedge plays out - recognizing there are other ways to read the chart - that could have the dollar at higher levels about the middle or end of May. Here's the chart:

TLT made a modest rise back to its 50-day moving average. The indicators are in position to confirm, if it ticks higher on decent volume in the coming days. Buying volume was certainly evidence on the two days where you can see that volume bar spike up recently. Not many people seem to be expecting bonds to rally seriously. That doesn't mean it's a contrarian indicator that guarantees bonds do in fact rally higher, let alone get to new highs. But we'll continue to watch this because it will be an interesting development if bonds do indeed move up in the C-wave we've discussed before - it would look even more like a US Treasury bubble if that happens! Since the A-wave that goes along with this idea took about two months, a C-wave high would probably take about two months also. Some of its movement could be counted since mid-March, so we might think about mid-May or late May as a potential time frame.


The time convergence of middle to late May is interesting for some other reasons, such as the Fibonacci time extension that I commented on some days ago with respect to the equities markets. (That time frame would be approximately 1.618 years from the October 2007 highs in the stock market.)

We'll do more charts review this weekend, along with the usual roundup of discussion and analysis. Meantime enjoy your Friday evening!