Treasuries Are Moving Higher

 | Aug 15, 2014 | 12:00 PM EDT  | Comments
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Stock quotes in this article:

TLT

,

nly

,

nmfc

,

taxi

,

cldt

,

dre

Ukraine and Russia are getting in the way today. Inflation data from this morning were actually fairly tame, while sentiment was below expectations.

This conflict has again pushed Treasuries higher. The iShares Barclays 20+ Year Treasury Bond Fund (TLT) is hitting levels not seen since 2012 where the price on the weekly chart is hitting the 2.5 Bollinger Band. We seldom see a 2.5 standard deviation move on long-dated Treasuries. In fact, this level almost marked the highest point in 2012 for TLT.

The ETF retraced about $4 the next week, and then consolidated. It did briefly break the level seen on the original 2.5 standard deviation move, but then spent the next 18 months falling almost 20%. I don't know if we can expect quite the same thing to happen, but it is near the top of the price channel; plus, it has a very extended move. At the very least, I like the short with a stop on a weekly close above $199 and a target of $114.50 to cover.

iShares Barclays 20+ Year Treasury Bond Fund (TLT) -- Weekly
Source: StockCharts.com

This day-to-day action is enough to drive a person insane though. I really have adjusted my focus to the weekly chart. I pulled together some yield oriented names with attractive weekly charts along with recent insider buying. This group of five has experienced buying of at least one insider in good size over the past week. In two cases, there were three insider purchases. These are financial oriented names with a trio of real estate investment trusts (REITs) headlining the group. The REITs, though, are in three different subsections of the category: hotel, industrial and financial.

Yield-Oriented Names With Recent Insider Buying
August 15 portfolio

The group averages a yield just over 7% with an impressive double-digit average for Return on Equity (ROE). The payout ratios, at their current levels, are very acceptable. These can change if earnings change, but overall, they've been consistent. The group is a range of small cap to large-cap and includes: Annaly Capital Management (NLY), New Mountain Finance (MNFC), Medallion Financial (TAXI), Chatham Lodging Trust (CLDT) and Duke Realty (DRE). This afternoon, I'll run through the charts on each of these, but I have taken a long-term, equal-weight position totaling 5% of a long-term growth and income portfolio.

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