The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) -- Here at
, we have been trading the long side of the bond market since late February. We have had objectives of 98 to 100 on the TLT, and also a time cycle objective of a peak sometime in the June/July period. We show a daily chart of the TLT below, and note that the moving averages we follow are beginning to cross over and in addition, the daily stochastic is below the 80 area.
These are often signs of waning momentum when they occur after a rally.
While a rise in T-bond rates would affect all bonds, there are some other bond ETFs that seem more attractive to us.
The corporate bond ETF (LQD) looks more attractive on a technical basis -- and we would be more comfortable buying this for the fixed income portion of portfolios
. For those who are more aggressive, the high yield bond ETF (HYG) is also attractive -- but certainly riskier.
Another area of the interest rate markets that may be worthwhile owning is the Municipal Bond ETF.
Earlier in the year, there was some negative sentiment on Municipals causing prices to be depressed for a period of time, and while this pattern has ended, Municipals may still be a better area to invest in than Treasuries. We show a chart of the Munibond ETF below. Of course, people who live in states with robust munibond markets can buy ETFs for those states. We also show New York and California below.
For those readers who work with financial advisers,
now is the time to discuss portfolios of individual bonds in the context of laddered portfolios.
This is the best way to invest in a rising rate environment. While we are not expecting a big rise in rates this year, eventually such a rise will come and readers need to be prepared. We will write more about this later in the year should rates start to rise as there are several strategies that will help investors.
Fred Meissner is founder and publisher of
. Fred is a CMT and past President of the Market Technicians Association (MTA). He recently left Merrill Lynch's Market Analysis Department and Sector Strategy Department to form The Fred Report. A detailed bio is here: