2022-07-29

What's Going On With TLT vs ZB?

Depending on where you start the pattern, TLT is trailing ZB performance by about 3 to 4 percent, sometimes as much as 5 percent. The gap is easy to see today because ZB is breaking away to the upside through a horizontal from, but TLT hasn't even cleared a horizontal from late May. The bottom chart shows how TLT outperforms ZB in the long-term because TLT pays divideds, while ZB is price only, but even stripping out dividends (in set) shows teh wide variation. What I don't know is why this variation exists. it could be random. In the grand scheme, it doesn't matter as long as the trend is right because eventually, TLT will breakout or ZB will fail. Yet I'm wondering if there's something to this relationship that would tells us to buy TLT here expecting a gap close, or to buy ZB because it won't close. Looking at the gap over the past year, it looks like TLT should close the gap in a rally and widen the gap if the market falls, but thus far the gap has not closed in the rally.

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