Safehaven | Buy Bonds for a Trade | Printer Friendly Version

November 11, 2005

Buy Bonds for a Trade
by Charles Meek

Dow Jones Industrial Average   10,593
Value Line Arithmetic Index   1,959
30-Year Treasury Index   4.81%
Gold 1/10 Ounce   $46.58

The Big Picture for Stocks
The 4-year cycle is negative for stocks into 2006.

Technical Trendicator (1-4 month trend):
Stock Prices   Down
Bond Prices   Up
Gold Price   Down

Our Technical Trendicator for bonds has turned up. I am not as confident about the buy signal as I might be because the sentiment has not gotten as bearish as it might for a good buy signal. But we are oversold and the trend indicators are turning up.

It could well be that given the new declining trend in oil, and the recent indicated trend in housing (Toll Brothers lowering of guidance), that the Fed could stop its upward rate pressure on interest rates.

We use the bond ETF (symbol TLT) as the benchmark for bond prices. The previous signal was a sell at 92.96 back in May. It is at 88.71 as I write this. So the model has kept us out during the decline in prices over the last several months. Note our track record in the accompanying table.

If this trade is going to work, bonds should hold near the current price. Put a stop on TLT at 88.12.

DATE	SIGNAL	TLT INDEX 20+ Year T-Bonds	% PROFIT ON SALE	TECHNICAL TRENDICATOR CUMULATIVE % RETURN	BUY/HOLD CUMULATIVE % RETURN	CUMULATIVE ADVANTAGE OF TECHNICAL TRENDICATOR	PER ANNUM ADVANTAGE OF TECHNICAL TRENDICATOR
2/21/2003	BUY	85.68
3/14/2003	SELL	89.96	5.00	5.00	5.00
4/18/2003	BUY	87.80
6/19/2003	SELL	94.10	7.18	12.53	9.83	2.71	8.3%
8/21/2003	BUY	83.00
3/26/2004	SELL	89.05	7.29	20.74	3.93	16.80	17.9%
5/20/2004	BUY	82.07
9/4/2004	SELL	86.24	5.08	26.87	0.65	26.22	25.3%
4/1/2005	BUY	88.73
5/17/2005	SELL	92.96	4.77	32.92	8.50	24.42	24.6%
11/9/2005	BUY	88.72

Notes: The Technical Trendicator is a 1 to 4 month market timing model, which in this case is applied to the 30-year Treasury bond. We use the 20+ Year Maturity Exchange Traded Fund (symbol TLT) as the benchmark. Past results do not guarantee future results.

Regards,

Charles Meek
MeekMarketModels.com

Mr. Meek is a Registered Investment Advisor and editor of MeekMarketModels.com.

MeekMarketModels does not guarantee the accuracy or completeness of this report, nor do they assume any liability for any loss that may result from reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice and are for general information only . In making any investment decision, you will rely on your own review and examination of the facts and the records relating to such investments. Trading the market is extremely risky. Our suggestions are often very speculative and not suitable for many investors. Past results are not indicative of future returns. Meek Market Models, Inc.