SPX500 future for coming weeks Long story short. New highs incoming.
I went long today before VIX loses its mind from the good ole "EVERYTHINGS GANA CRASH" people and premiums on calls/puts go wild.
---Indicators:
RSI is trending up. not over bought yet.
Gold sold off hard today. Still down trending off a massive weekly resistance
TLT had money go into it and its rise got smacked back down to almost even with its weekly open
emerging markets had a great week - always good
vix is vix - My assumption is we see volatility go crazy as we swing around the monthly resistance. Then it will die down until election time.
TLT
TLT weakness & bond weakness, TLT down to $132TLT is a 20+ year bond ETF that made strong highs throughout the rate-cutting cycle and rightfully so. The inversion of bonds vs the equity market has caused bond yields to drop and because of that since the price of bonds is directly inversely correlated to their yields, prices in TLT and other bonds have been increasing. The low rates have come to a halt as the rate-cutting cycle has stopped, or so we think it has. TLT has since then entered a downtrend in a channel and looks to be continuing in that respect. Bond yields are so low, that the convergence with the SPX is imminent, we've seen a slow increase in yields which will further push the price of TLT down. Another factor is that the equity market is continuously showing strength and looks to be on the rise for the next few months based on FED policy to pump more money into the economy. The volume on TLTto the upside has decreased as well and every swing lower is accompanied by strong volume.
Disclaimer: This idea is for educational purposes only, this does not constitute investment advice. TRADEPRO Academy is not liable for any market activity based on this idea.
Treasuries are about to see a great rally hereThe squeeze in Treasuries is coming soon. Right now, it's just getting started and testing the break. The narrative of deflation has picked up steam strongly in the past 2 months with oil now clobbered, Powell going dovish (today), stocks down, and many many other reasons.
TLT LongTLT has pulled back to a very key trend line with additonal supports coming in below. On the hourly chart, we have positive divergence on TLT meaning we should see upside soon in the short term. Given the postures of the markets and how treasuries act as a flight to safety asset, it is reasonable to assume they will go up in price as stocks fall.
For this trade, I advise picking up TMF (x3 leverage) with a stop anywhere from 28.00 to 26.60. I also recommend scaling into the position with 2 or 3 batches comprising your total allocation that you are willing to invest.
TLT - Staying sideways but should resolve higher thenWe are in a consolidation, currently in possible wave B of (4) and should soon see a push lower for wave C to around 133 before going back up again one more time for wave (5) before we see any deep retracement.
Notice that waves 4 are tricky as they can take any form of corrective pattern, zigzag, triangle or flat.
One more option is that wave 4 is in at 136 and we continue higher but for that I'd first like a move above 148.
Is it Time to Short Bonds and Long Stocks? With TLT at nosebleed heights the question obviously becomes, is it time to switch into equities yet?
As you can see TLT (red line) reaches fever pitch levels almost always at excellent entry points into equities, going back all the way to the GFC this has held true.
TLT for what it's worth is also extremely extended, driven to these heights on trade fears, slowing growth and a litany of over issues including the abundance of negative yielding debt, leading to increased interest in US treasuries.
But as traders we all know that nothing can go in one direction forever, what goes up must come down.
Stocks for their part look to be in 'hurry up and wait' mode, the September FOMC meeting will likely be the catalyst for the next move (both for stocks and bonds). If the fed provides the desired outlook (or direct rate cuts) that equities want then stocks will be the place to be, bonds too will benefit from lower rates (premium wise that is), but the liquidity will undoubtedly support higher equities.
Until the FOMC meeting, best to be cautious, but i for one would be careful about staying in bonds for too long.