Public trading strategy
Stocks plunge but bonds rally as traders rethink rate hikes — ride the Treasury
Thesis
With tech stocks in a freefall, money is rotating into safe government bonds, pushing their prices up. At the same time, some traders are starting to doubt that the Fed will actually hike rates as aggressively as the market currently prices in. If rate hike expectations cool down, bond prices will rise even further because they benefit from lower rate expectations. This creates a double tailwind for bonds: a flight to safety from the stock selloff plus a potential shift in rate expectations.
Strategy approach
Build a strategy that enters long TLT (20+ Year Treasury ETF) on the daily timeframe when the 10-day RSI crosses above 55 and price is above the 20-day exponential moving average. Exit if RSI crosses below 45 or after a 21-day max hold.
Markets and timeframes
TLT1D