The bond market is going wild again on the upside, thereby pressing 10 year T-note yield to 3.94% from Friday's close at 4.01%, while the 2 year T-note is yielding 3.04%... Let's take a look at the TLT's (Lehman 20 year T-bond ETF)...

Let's notice that the TLT's have rocketed to a new high for the move at 94.71, which is right at the resistance line of the entire bullish price channel that has been carved-out since the June 12 low at 82.20. Granted, there is no reason why the TLT's cannot continue still higher, into the 96.00 target area next. However, typically when the advance hurdles its top channel line -- amidst an overbought condition -- the price structure stalls and/or reverses.

Right now, the flight to safety trade that really began to accelerate off of 91.00 on 11/14 also is becoming a very crowded trade as well, which cannot be considered a positive if you are one of the "reluctant" holders/buyers of 20+ year Treasury paper that is yielding about 4.30%. One of these days, if not hours directly ahead, holders of long positions will find a reason, or react to a reason, to quickly bail out of the long side of the TLT's.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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