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Since QE3, Treasuries Outperformed Stocks and Commodities

The problem with the notion to avoid U.S. Treasuries is the thought that investors must hold bonds to maturity, which is far from the truth. You could have bought the U.S. Treasury 10-year note on a buy-and-hold strategy as cheap as 6.68% in January 2000, obviously a successful investment with the S&P 500 at 1465 at that time.

A buy-and-hold in the 10-year note has been clearly successful right into November 2007 when this yield plunged below its 200-week simple moving average then at 4.5%. Even a buy at 4.5% in November 2007 outperformed the S&P 500 then above 1500.

Over the past five years both the 10-year note and S&P 500 have been buy-and-trade opportunities where "risk off" versus "risk on" has been the strategy between the two.

Fast forward to Sept. 13, and we find that since then the "risk off" trades have outperformed "risk on" trades as a buy-and-trade" strategy going long in TLT has outperformed SPY, the SPDR Gold Trust (GLD), and the Energy Select Sector SPDR Fund (XLE).

It seems that the Congressional agreement to compromise on the fiscal cliff shifted the sentiment to "risk on" from "risk off" during last Friday's trading.

TLT (125.66): At Friday's close TLT was up 6.6% since Sept. 14, and was still up 6.1% after Monday's weakness in TLT. As the table above shows TLT outperformed SPY, GLD and XLE since QE3 was announced. My semiannual value level for TLT is 122.20 with a weekly pivot at 126.16 and monthly risky level at 129.39.
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GLD $118.36 0.00%
SPY $186.63 0.00%
TLT $131.50 0.00%
XLE $55.28 0.00%
AAPL $93.99 0.00%


Chart of I:DJI
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S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

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