Anticipating TLT's Upside Reversal

This past Tuesday, April 30, Mike Paulenof posted a heads-up to MPTrader members about his technical setup on TLT (20+T-bond ETF) ahead of Wednesday's Treasury Refunding Announcement, the FOMC statement and Fed Chair Powell's press conference, and Friday's Jobs Report.

Mike wrote:  "I cannot help but be concerned about this morning's weak economic data (Chicago PMI, Consumer Confidence, Dallas Fed Survey). If the data turn out to be the tip of an iceberg then it suggests strongly that neither stagflationary impulses nor a sudden Fed shift to a much more hawkish posture is in the offing. On the contrary, growth will begin to deteriorate markedly, a disinflationary trend will resume, and the labor market will deteriorate.... When I overlay "my concerns" on my attached 4-HourChart of the TLT, I can make a compelling argument that the 4-month, 13.2% correction from 100.58 (12/28/23) to 87.34 (4/25/24) is nearing completion ahead of a powerful recovery rally that will traverse to the upside the dominant Dec-Apr price channel. From a technical perspective, a climb in TLT through consequential resistance from 89.10 to 89.90 will trigger upside reversal signals in my work that will project an initial target zone of 93.60-94.00, and thereafter, to 98-100... Last is 88.43 (4/30/24)..."

Fast-forward a few days, and we see that TLT reacted positively to all of the subsequent data and macroeconomic catalysts -- Powell's "dovish" press conference and especially the cooler-than-expected Jobs Report for April, that diminished perceptions of the strength of the US economy, stubbornly strong labor pressures, and fears of stubborn inflation. 

Most importantly, for the markets perhaps, last week's data increased expectations of one or more rate cuts during 2024 and reduced growing concerns that Chairman Powell might need to hike rates again.

TLT prices reacted strongly to the Fed and the economic releases (and benchmark 1-year YIELD declined from 4.70% to 4.45% from Wednesday to Friday).  TLT climbed from Wednesday's low at 87.80 to Friday's high of 89.89, or +2.4%, and +1.7% from Mike's Tuesday update.

Have Treasury prices (TLT) put in a significant multi-month low? Have longer-term Treasury yields peaked and reversed to the downside? What is the impact of the $9/bbl decline in the price of Crude Oil on perception of inflation and market behavior?

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