In the Era of Negative Rates, it is hard to imagine a bond market crash; a bond market correction yes, but a crash will not occur anytime soon. Yes, the market will crash one day, but you could be long gone by that day. Mass psychology teaches us to focus on what the masses are doing and not to focus on what might or might not happen. We used Crowd Psychology to come up with the following analysis; that was sent out to our paid subscribers back in Feb 2016. Hence, all sharp corrections need to be viewed as buying opportunities.
The trend is still up, but bonds are still trading in the overbought ranges; this can be seen by looking at the MACD’s and RSI. There is a relatively decent layer of support at 162, but a weekly close below this level will most certainly lead to a test of the 158-159 ranges. At that point, individuals interested in going long bonds could deploy some funds into a bond based ETF. Market Update Feb 29, 2016
Commit half of your funds, just in case the pullback is stronger than expected. This is a very mature bull, and volatility levels are extremely so a bit of prudence is warranted.
The bond bull market while mature is still quite strong and bonds could drop below 154 without affecting the bullish outlook. We are not stating that they will drop to 154, but just illustrating that even such a strong move down would not invalidate the bullish outlook. A move to or below 154 would make bonds an excellent buy and at that point, traders could deploy the 2nd half of their funds into a Bond related ETF. Market Update Feb 29, 2016
Now watch this video and understand how some people purposely use scare tactics so they can get better prices, but almost never act on the advice they are dishing out. The bond market did not crash, nor did the market. The market corrected just like the bond market will, but a crash is not in the works. Don’t listen to naysayers; they have nothing better to do then chant songs of doom and gloom.
Other Articles of Interest: