The last time I looked at the i-Shares Lehman 20 plus Year Treasury Bond Fund (symbol: TLT) was on December 13, 2011, and I wrote the article, "TLT: Still Topping". This week's gap down below the range has sealed the deal, and in all likelihood, TLT has put in an intermediate term top. See figure 1, a weekly chart of TLT.
Figure 1. TLT/ weekly
The indicator in the lower panel looks at the number of negative divergences occurring between price and an oscillator that measures price. The negative divergence are noted by the pink labels on the price bars, and the indicator in the lower panel measures the number of those negative divergence price bars occurring over a certain time period. When looked at across multiple assets (i.e., not just Treasurys), negative divergence bars are more of a sign of slowing upside momentum than anything else, and that has certainly been the case with TLT. As I wrote last time, "Consolidation, of the prior price move from the March, 2011, could occur in which case the highs and lows of the negative divergence bars would serve as limits to the range bound activity. Consolidation means that there is a time component involved, and TLT will need to move sideways for a while. For now, TLT is dead money."
TLT has moved sideways, and with this week's price action, it has broken below the multi-week trading range (that was predicted by the clustering of negative divergence bars.) Yes, it is dead money.
Of note, my bond model still remains positive, and in such cases, where I get a divergence between the technicals and the fundamentals, I will reduce my position by at least half until there is a consensus.