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TLT

Great Trades are Rarely Crowded: Long TLT and Short Twitter IQEveryone is a good trader in a bull market, but in a bear market, these good traders are reduced to hopium-fueled twitter analysts watching core CPI and interest rates. The former and latter data points serve nothing more as useless, out-of-context generalities for the single-celled Wall Street Bet retail enjoyer. But recent activity across the pond has sparked interest in the bond. These traders are now converting en-masse to self-proclaimed bond market experts with the thesis: "The bond market is broken" Except, the bond market is not broken. It is operating as intended, although two lines on a chart may disagree with anyone unfortunate enough to buy at the start of the year. Why is retail sentiment like this? The simple answer is that the fed is late, but a more-elaborate explanation follows: Bond yields rise because bond prices fall. It is the acquisition of a bond at a specific market price that determines that bond's yield, as a function of the difference between that bonds underlying rate (which is fixed) and the resale price. When interest rates rise, bond prices fall because newer bonds spawn with the higher base rate. This makes prior bonds, which have a lower fixed rate, less valuable because they output less extra cheddar. People then resell these bonds for a lower price and the yield rises according to market forces (the fed does not directly control this). Shorter duration treasuries follow interests rates very closely, whereas longer dated treasuries are difficult to influence by rate hikes. Either way these are secondary or tertiary market effects. This phenomenon is what results in an inverted yield curve: you can be paid more money to lend money for a shorter duration than a longer one. But why would something so illogical even happen? The answer is because the treasury market is not just any pig, it's a truffle-sniffing pig. For every brain cell in the equity or corporate credit market, the treasury market has a thousand-fold more. With these one-thousand brain cells, this pig (specifically the longer-dated pig) is rewarded by looking further ahead into the future. What does this pig see when they look that far ahead? An recession that will obliterate the equity market like Exodia. The long dated treasuries have started to price in a recession (very slowly) by pricing in rate cuts. This is why stocks and bonds are still correlated, but the correlation has started showing signs of weakness. The longer tail of the curve is smarter and refuses to sell these bonds like a fire sale. Recessions imply a fed pause and eventual rate cut, so no more high-interest treasuries. This makes bonds desirable, and this process is only starting now. I can already feel the credit market enjoyers seething and muttering: SLR relief expired! Reverse Repo! Basil Tea! No, none of these buzzwords matter. It's true that the pandemic has modified the initial conditions of the bond market. The TLT suffered immensely as the federal reserve promised to not raise rates through forward guidance, broke those promises (as is should have), and also allowed SLR Relief exemptions to expire. This made bonds less sexy and glamorous for banks like JP Morgan because the expiry affected treasury exemptions: banks didn't need to hold additional collateral to slurp bond yields, and now they again do. It's much easier now to park money with the fed overnight and get a little more back. The RRP is a much better facility than treasuries as a result, so bond indexes have dropped even harder. SLR relief is a cherry on top, but this truffle has always tasted good without it. It's absence, and whether it is reinstated or not, should not be a determining factor in the recovery of bond prices, because: No market has currently priced in a recession, and interest rate expectations demonstrate that without a chart, but when that happens, the bond market will get top billing. Bonds will decouple from stocks and TLT will rise from the ashes like a phoenix in the next quarters, incinerating twitter and reddit soys drawing lines on a chart and shorting the index. Nobody saw it coming, they will say, but good trades are never crowded. Smart money extracts the deep value from TLT in the pre-recessionary market by going long (DCA or otherwise). Degenerate smart money is gambling with TLT long calls. Whereas most of the market is still buying stocks, crypto, and chanting that the markets are broken and the fed will come roaring in. These pigs won't find any truffles in this market. Interest rate expectations are unrealistic and the fed will have to pause sometime early 2023. The recession will destroy demand, taking growth, inflation, and equity market with it, rising bond prices and dropping bond yields. The stock market will crash (I don't consider this current price action a crash yet) and continue burning even as the fed pauses, and dip buyers will be buying a dip that keeps on dipping while you're selling your new truffles on ebay because you lost your job due to mass layoffs across the entire economy.
NASDAQ:TLTLong
by coinhoIio
10
DXY is Not A Fan of BitcoinI am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
TVC:DXYLong
by coinhoIio
TLT, UST10Y and SPY - a heads up relationshipI read somewhere recently about two co-relationships between bond prices/yields and the SPY. First was about TLT - where TLT goes, the market (SPY) follows it was said. Second, was about the UST10Y (US Treasury 10 Year Yields) having to abate its bull run before the SPY cools its bearish rout. So, I took the opportunity to put these thoughts together visually and overlaid their charts. Interesting observations between these three it seems... There are three highlighted periods in 2022, all of which provide a very similar pattern. Notably, the UST10Y has a tight inverse relationship with the TLT (UST 20Y Bond ETF), which is expected. And if we follow the markings in order... The time line starts the cycle where TLT brings the SPY higher as the two are in alignment to move higher, where the UST10Y drops. Then there is a period where the UST10Y rises, and the TLT falls, but the SPY continues to countertrend (from TLT) and head upwards. This is not sustainable and TLT gave heads up of that (red shaded red box). Int he rest of the red box period, this is where the SPY stop diverging with TLT and follows TLT int he downward move. The shaded red box is the period where TLT is like a leading indicator of the SPY. To restart this whole cycle, it also seems that TLT needs to have a MACD crossover, and a MFI Histo crossover; the time lines mark the MFI Histo crossover after the MACD cross over. Given these patterns, the current situations appears to favor a continued downside drift, at least until a MACD crossover, post MACD bullish divergence, and then a MFI Histo crossover. This would appear to take several weeks more. Heads up!
NASDAQ:TLT
by Auguraltrader
TLT: Order Flow, Auction Process & Failures To RotateHey traders, If we zoom out to check the price action in TLT from a daily perspective, what do you notice? Every single time there is a failure to rotate (hinted via diamond labels), the new expansionary wave leads the market towards a new equilibrium point that so far has been found at much lower prices. I’ve circled each and every instance where these failures to rotate back up occurred. Each market is an auction process, and via the OFA script , we are able to get a pristine read of the constant ebbs and flows. The structure depicted via the script should also be a clear red flag that in this type of well-anchored bear market, being a hero typically gets you in trouble, so stay with the trend. Remember the two key main features of the OFA indicator: Magnitude: A major clue that will help determine the health of a trend is the type of progress by the dominant side in control of the trend. We need to ask the following question: Are the new legs in the active buy-sell side campaign as identified by the script increasing or decreasing in magnitude? Velocity: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
NASDAQ:TLTEducation
by FlowState
6
$TLT: Preparing to buy when safeI am monitoring bonds here, as we are approaching the target of a weekly down trend signal that fired recently, while the monthly timeframe trend is about to reach its end. By the end of September, the odds of a reversal in bonds will be very high, while equities are looking like they could crash lower from here possibly, and we could get inflation to come down, likely due to the effect of recessionary forces at play thanks to Powell's hawkishness. Since the Federal Reserve is hell bent on killing inflation hiking rates, and the data they use won't make them worry about this course of action until it's likely too late, odds of something breaking badly here are substantial. As such, I'm eager to spot the bottom in $TLT / $ZROZ to invest. We have a decent enough juncture here, where it starts making sense to pay attention to reversal cues in multiple timeframes and monitor signals closely to go long big time when confirmed. Best of luck, Ivan Labrie.
NASDAQ:TLTLong
by IvanLabrie
Effective Fed Fuds 2023 - Powell's War on You Growth, Employment, Inflation - aka what's left of the Economy. 1. Employment - seeking roughly a reduction of 12 Million Jobs. 2. Growth - reduction of 50% for S&P 500 from Highs. 3. Inflation - Leads until Rate Lag breaks everything. _________________________________________________________________________________ Capital Stocks Powell - Bonds are going to see a Yield Curve Inversion, larger than usual. There is no single condition, what is the term premium on Longer Rates is what matters most. Powell - Housing will see a significant correction, we want the housing market back on a sustainable path. Powell - Equities are overvalued, period, the end. We're committed to "Price Stability" Powell - The US should not return to a Gold Standard - Digital Currency is the path. Powell - We flooded the System with Money (Digitally) by buying Bonds now we are selling them. _________________________________________________________________________________ Forward Rates are indicating he is very serious. I've warned about this for well over a year now - safe to say its come to pass.
CBOT:ZQU2023
by HK_L61
2
Aftermath of the Fed rate hike - NASDAQ, S&P500, SOXL, ENPHJust a quick rehash on the few that I have been closely following of late, especially after the Fed raised rates 0.75%, as expected; but the important bit was in the narrative (not analyzed here). The NASDAQ futures had 11,900 simply broken through, and the next day followed through with a slight gap down, as global markets react. The S&P500 ETF, SPY, similarly broke down below 388, and closed at its low of the day. Both have bearish candlesticks with momentum, and MACD is supportive of further downside, likely to visit the last low (and possibly exceed) within the coming weeks. In the same light, SOXL (as covered previously) had all its bullishness invalidated since last week. There is a slight divergence with the MACD struggling to maintain a slight bullish stance, but the candlestick is just pain bearish, period. This is highly likely to exceed its previous low and go below 10. ENPH, the fascinating one, is amazingly holding at the lower end of the recent range. It appears to most likely break down to the lower end of the lower range, about 275, to meet the 55EMA. Yes, this is one that is above its daily 55EMA. MACD however, is less bullish with a cross under its Signal line. 235 is a critical support, after 255 (if it is to hold its bullish case). Overall, bearish as previously expected, to the last low for the major indexes and the corresponding ETFs. In the wider scope (not shown here), the USD futures is getting a pump, and both TIP and TLT may be bottoming out. The latter being some deviation from the recent trend where almost all drop except the USD.
CME_MINI:NQ1!Short
by Auguraltrader
Long Duration Bonds (TLT)We haven't had to manage cycle risk, on a sustained basis to the downside, since 2008-2009 and 2000-2002. The biggest problem in financial markets right now is there's no Event. This is just Cycle-Risk and we haven't had to manage cycle risk - on a sustained basis to the downside - since '08-'09, and 2000-2000 before then. The Fed is in QT. Financial conditions are still in accommodative territory, according to the Financial Conditions Index, and we have a long way to go. We will not see any dovish actions from the Fed until the economy deteriorates significantly. I'm convinced we're past the peak in terms of inflationary pressures. Looking at our portfolio, the #1 thing we aren't allocated to is duration. I think the long bond could rally 20-35% from here. I think when it moves, it's not going to let you back in the trade. The world is short-duration right now. Tons of cash on the sidelines. The dollar rising has been supporting U.S. equities. When it deflates, there will be a significant change in style factors. Expect a significant reversal in sector and style factors ahead. Simple rule on when to enter a long bond trade: It's compelling, given historical backtest, to go long the long bond when the year-over-year inflation rate peaks. (18-20% annualized) YoY Inflation data: fred.stlouisfed.org NFCI: fred.stlouisfed.org
NASDAQ:TLTLong
by RHTrading
How I Learned to Stop Worrying and Long the Treasury MarketHave you ever been told that stocks only go up? How about not trying to time the market? If you have, you might just be the exit liquidity the credit market needs. In this chart I will help you avoid losing money in the next two quarters by rolling your portfolio into cash and the treasury market. If you have followed the last few charts, you are already sitting in a cash portfolio as we head into a disinflationary period. That's right, inflation has already peaked even though the credit market is pricing in a potential 100 basis point hike this month. What isn't being priced in is the recession coming around q4 or q1. This is an opportunity for you to roll some cash into the treasury market and make some gains on top of not losing money. You may have heard something like "the treasury market is broken bro". This is from people that don't understand the dynamics of the treasury market. The treasury instruments do not perform well when interests rates are going up, but the up and coming recession will sharply slice inflation in a very short period of time. This will result in a fed pause. This isn't priced in yet because interest expectations are too high to account for a rapid recessionary disinflation. Look at how quickly TLT started to make gains after the fed stimulated the economy during the pandemic. This is the ideal time to start a DCA into the treasury market because the credit market is still struggling to come to terms with the fact that a soft landing isn't going to happen. When they do, the treasuries will pump in anticipation of a fed pause or even a pivot. I don't think a pivot will happen without a pause, but the credit market, being the pack of wild dogs they are, will conflate the two. This is a trade that might have a very small bit of downside to it at first because of a potential basis point increase, so if you can't handle that, a DCA over the next month or two is best.
NASDAQ:TLTLong
by coinhoIio
This is where the recession level is. #Gold #GC #TLT #TNGold once again in history will probably tell us if we are going in full recession mode (ala 2008) or not. 1670-1680 been defended fiercely four times in the last 30 months, markets are going to see how much fear is there one more time .. heading into FED September 20th FOMC meeting. A strong daily close under that level would be the open door to something bigger than what we have experienced in the last nine month. Gold here as the sum of overall 10Y Yields, TLT, TN futures market directions. EUR and Yen of course all dependent on them.
COMEX:GC1!
by Artes_
2
TLT nearing bottom Still in line with my previous analysis. I approach this from an Elliot Wave perspective with Fibonacci relationship. To me this looks like a macro ABC with final leg down reaching extremes. We are likely in a bullish divergence territory on a Weekly Chart. The chart above is Daily for easier wave count to pin point where C might end. The support box is in gray; this is an area where a price could react with a strong bounce or reversal. As you can see we are already there so support could be found very soon. Another fib support coming up in the 90-96 range where I feel there is a strong possibility for a bottom (not guaranteed, hunting bottoms is a dangerous game). If we take a trend line in wave C from ii to iv and measure the trajectory of where v should end, it also points at a region of 90-96. If the market presents this opportunity it has a number of supports coming together all in that particular area. This bottom could mark the top in US10Y and other treasury bonds since they move inverse to TLT. Also the dollar index is hinting at a top and pushing extremes so I expect a reversal or a top in Sep-Oct timeframe. The month of September / October (2022) might come with fire works! Not a financial advice. Cheers,
NASDAQ:TLT
by Elliot618
2
SPY Weekly review and forecast: August 22, 2022Last week brought the first sell side activity the markets have seen in nearly 6 weeks. The market digested comments within the FED minutes as being dovish, and was on track to extend the rally through most of the week. The tone changed on Thursday and Friday and the market was unable to hold the 4300 level. Most of the selling was precipitated by technology and the financials, while energy finished positive on the week. Volatility has also begun to expand as the VIX finished positive on the week. The weekly expected move in the SPY is also greater than last week's by almost a full point. SKEW closed flat-to-down week over week, but is still in an uptrend. SPY -1.16% (+/- 8.3) QQQ -2.28% (+/- 8.89) IWM -2.85 (+/- 4.97) ____________________ Technology -2.5% (+/- 4.09) Energy +1.26 (+/- 1.26) Financials -1.69% (+/- 0.83) ____________________ VIX: +12.19% (23.07; ~50% IV Percentile) _____________________ The rally we've seen since June has been impressive, so a pull back was going to come eventually. Its important to zoom out and look at the big picture perspective. The market may have re-entered the sideways channel I outlined at the beginning of the month. I'm looking for this week to have a mildly bearish bias, but most probably staying within the expected move in advance of the FED's Jackson Hole meeting (so think between 4150 - 4300 in SPX). I'm going to be keeping a close eye on the Bonds as well as Energy. If the Bonds continue to fall, it will be more fuel on the inflation fire. With regards to energy, stocks like XOM are at key inflection points on their Volume Profiles; selling in energy now would weigh heavily on the indices.
AMEX:SPY
by InnerMotionTrading