TLT sitting on a critical support level
I have marked up the chart for TLT in the last hour to point out the key levels and position of the market. It is somewhat rare to get a market that gaps up like TLT did at the end of October and then just sits there in a tight range. I believe it is a sign that the market is tired and that there are very few buyers up here and it appears as if the short-sellers are afraid to put on new positions (based on the small trading ranges). Basically, the next move out of the last 3-days range could set up a much bigger move. I imagine that TLT could fall to the mid-point of the rally around the 106-110 level, which is 7%-10% lower, whereas risk to the stop is 3%-4%. If TLT falls under today's low tomorrow, I believe it will warrant a short position with a stop in the 120 area.
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