The Great Long Bond

November 12th, 2012

by Dominic Cimino

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You gotta love the long bond. Check out the monthly T-Bond futures chart below. It trends up for thirty-two years, and then decides to have a bullish blow-out through its trend-channel. Low beta U.S. Treasuries offered up a risk-free trade of a lifetime gift to true trend followers. This is a classic example that illustrates why it's wise to look at charts.

Many have surmised T-Bond's demise for quite some time, and granted, it's very tough to get bullish at this point. Getting bullish is nearly impossible with all the chatter about the "biggest of all bubbles." But a real contrarian might contemplate it. If we're truly in a liquidity trap, and the investment world allows the U.S. to approach the national debt level of Japan, then maybe some of us should be contrarians for just a bit longer.

History will look at this Treasury rally in amazement. It reminds me of a legendary story once told by the late Olympian Abel Kiviat, and involving the late great, Jim Thorpe. Kiviat recounted how at an embassy reception during the 1912 Olympics, a renowned champion high jumper was asked to jump up and touch the room's chandelier. He failed. Then the much shorter Thorpe reportedly took off his jacket, jumped up, and actually held on to the chandelier.

Whether you're bullish, bearish or indifferent, you must admit that this chart is a thing of beauty.

Dominic Cimino

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Preferred planning concepts, LLC & Cambridge are not affiliated.


© 2012, Dominic Cimino of Preferred Planning Concepts, LLC (You can explore the services offered by Preferred Planning Concepts by viewing us on our website at www.ppcplanning.com) Any redistribution, reprinting, or reference to this chart or content is allowed so long as reference to the author and source is acknowledged.

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