Chart of the Day - Friday, August 16th 2019

Today's Chart of the Day was shared on Twitter by Strategas Research Partners (@StrategasRP). It is a chart of the 20+ Year Treasury Bond ETF, $TLT with a 200-day moving average in red. The indicator in the lower pane measures how extended price is from the 200-day moving average. Strategas notes that price is extremely extended right now. In addition, $TLT printed its highest 'overbought' RSI reading ever yesterday. Market Strategist, Bob Farrell once said: "markets return to the mean over time." Think of this concept like a rubber band that's stretched too far in one direction to the point where it quickly snaps back in the opposite direction. The red arrows mark each time that $TLT was extremely extended from the 200-day moving average. Each time, price quickly reverted back to the mean. Given this information, it wouldn't be surprising to see a correction in Treasury Bonds in the near-term.