Since 2022, large daily gains of more than 2.5% in TLT ETF have been more frequent. In addition, these large daily gains have not provided a signal of a market bottom.
On Monday, November 25, 2024, the TLT ETF rallied 2.5%. Some technical analysis interpreted the move as a signal of the end of the bear market in long-duration bonds. However, as we demonstrate below, the frequency of large daily gains of more than 2.5% has been higher in the current bear market than before.
The first histogram shows that there have been 48 daily returns larger than 2.5% since the inception of the TLT ETF. Also, since 2022, as the second histogram shows, there have been 9 such large returns. Therefore, from 2002 to 2021, the frequency of these large returns was about 2.05/year, but after 2021 it has been 3/year, although the TLT ETF has been in a bear market.
A bottom does not require large daily returns; during downtrends, those are usually “reflex” or “short covering rallies.” This is true in all markets, including the TLT TF.
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Charting and backtesting program: Amibroker. Data provider: Norgate Data
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