In our original discussion, Are Bonds Setting a Bear Trap?, we identified the possibility of a significant cycle turn.
Our October 3 follow-up, The First Sign of a Bond Turn?, noted that Bonds had formed a Daily swing low, but confirmation of the DCL remained outstanding.
We now have that confirmation.
TLT has confirmed a Day 35 Daily Cycle Low. The rally out of that low has also produced a Weekly swing low, with the Intermediate Cycle at Week 20.
That is significant because Bonds are not only in the timing window for an Intermediate Cycle Low, but are also approaching a potential Yearly Cycle Low.
The confirmed DCL is the first step. The Weekly swing low adds evidence that a more meaningful cycle turn may be developing.
However, the larger bearish structure remains intact. TLT is still trading below its key moving averages, and confirmation of the Intermediate and Yearly Cycle Lows remains outstanding.
The question now is whether the rally out of the DCL can gain enough traction to reinforce the developing Weekly reversal.
The bear-trap possibility remains alive. With the DCL now confirmed, price behavior is adding support to that possibility.
We’ll take a closer look at the developing Daily, Intermediate, and Yearly Cycle alignment in this weekend’s subscriber report, including what Bonds need to do next to strengthen the case for a more meaningful cycle low.
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