Treasuries update. Wave 4 still in progress.The complete structure of wave 4 will neatly resemble a classic triangle, only wave E will break to new highs.
This is the last attempt of the market to buy the dip in Treasuries. (Also the last attempt of EURJPY to reach a new high - should stop around 157 next week).
After that wave 5 of the downtrend in Treasuries will commence, targeting the peak of the crash in H2'23.
TLT trade ideas
Wave 4 in TLT is almost overI still cannot confirm that the triangle in wave 4 has ended. Triangles take time to develop, but once they are over, wave 5 almost always takes less than 0.618 of the duration of wave 4 to compete.
If W4 ended today, then the crash in Treasuries should end before 23 Aug 2023: by that time we will see 10Y at 10%.
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TLT | Inverse Head & Shoulders | LONGThe fund will invest at least 80% of its assets in the component securities of the underlying index, and it will invest at least 90% of its assets in U.S. Treasury securities that the advisor believes will help the fund track the underlying index. The underlying index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity greater than or equal to twenty years.
How I will profit from a major global recession with this tradeIn my opinion, the global economy is heading into dark times. I have revised my initial position of shorting equities to a much smaller position and instead will be going long government credit via TLT. What's nice about this speculation is it pays you to own it vs the other option of shorting equities.
The banking crisis has shown the cracks in the global economy. Not just in the US but globally. Yield curves from Germany to Canada are completely inverted. Typically liquidity is in the highest demand during the Spring and Fall. I expect this trade to pay off in late Q3 or Q4 of this year. The yield curve does NOT lie! It is predicting a major US recession. What we just saw with the regional banks in the US and Credit Suisse is just the start. During that crisis, we once again saw how bonds were massively in demand as people scrambled to get liquidity through safe assets.
There is nothing more technical about this trade than support and resistance and price action. This is a fundamental trade. A trade that I will be extremely aggressive with on my sizing as I believe the probabilities are very high.
TLT 4 TH WAVE TRIANGLE ENDING DOWNSIDE 85Iam posting the chart as a new Warning to All traders I see this as nearing it s end . I will state if this wave structure turns down from the time window we are entering into my panic cycle May panic and panic low june 16 to the 23 th 2023 is the next spiral as stated jan 20th 2023 forecast . the Importance of the march 13 /23 spirals back to june 13th 1949 plus the other 3 spirals are a cluster at each cluster of spirals events have occurred MARCH 13 2023 AUGUST 16TH 2022 OCT 13TH 2022 SEPT 6TH 2021 AND MY MARCH 18TH TO THE 21 ST 2020 . .BEST OF TRADES WAVETIMER !!!
Treasuries 2023 updated outookWave 5 is inevitable, only its time of flight is unknown. In a well-structured trend (and we have a perfect trend here), the time spent between points 3 and 5 is loosely related to the duration of 1-3.
I have seen waves 5 hit top/bottom at 0.5..0.786 of this ratio. It's never a precise fib number, but 3-5 does tend to be faster than 1-3. Based on these observations, here we have out timing estimates for w5 completion:
0.382 - June 6 (too fast.. 0.382 ratios are rare, but still possible)
0.5 - August 15
0.618 - October 23
0.786 - January 31, 2024
So, realistically, we are going to see Treasuries bottom out in September-October. By that time the market will achieve the "impossible four":
- 10Y paper will hit >10%
- SPX at 1500
- EURUSD at 0.75
- USDJPY at 100
Bonds near reverting its downtrend, $TLTThe 20-year bonds ETF is near a key breakout level that should confirm a new uptrend in bonds.
This should be followed by a breakout above 4,100 in the SP:SPX .
Just look a the bullish divergence between the MACD and the price of NASDAQ:TLT , its a very good signal.
Let's wait for the breakout and follow through.
% BONDS & INTEREST RATESThere's obviously lots of discussion about interest rates and where they are headed. Today, I'm going to look at long-term interest rates based on the well-known ETF: $TLT . Long-term interest rates are useful as a guide for most people who get a home-loan or longer-dated loans and is usually less prone to manipulation (by Central Banks) than short-term rates.
Bond prices move inverse to interest rates. A rise in bond price means a lower interest rate and vice versa.
📈📉 Let's have a look at the long-term chart. I'm using the weekly timeframe to remove the day-to-day noise.
You can see that since the January 2020 peak, bond prices have fallen. This was when interest rates bottomed and started rising. The bear market in bonds extended to Oct 2022. Subsequently, we have seen a rally in bonds and therefore a drop in interest rates.
The multi-trillion dollar question is: Was Oct 2022 the BOTTOM i.e. has interest rates peaked?
My technical view is that the bearish trend in bonds is still the dominant force. So far the bounce off the bottom does not yet signal a trend reversal. For this to be the case, I need to see TLT move higher beyond 114.
IF price moves beyond 114, I would be more confident in stating that at a minimum there has been a Change in Behaviour. At that price level, the size of the upward move would be the largest since the Jan 2020 top. Larger than the upward bounce that began in Mar 2021 and ended in Nov 2021.
A Change of Behaviour signals that market participants are starting to have differing opinions. It is this change in opinion that sow the seeds as the first step required for a trend change.
If the bond price falters prior to reaching beyond 114, it is highly likely that we have not seen the bottom and higher interest rates should be expected.
Clearly the next few weeks will be crucial in that determination. I will update my thoughts as the price evolves.
Zoom out and use what you know to make forward predictionsTLT is a precise instrument.
Weekly rarely leaves a gap behind, and if it did, it was a big move up or down.
It's the most forward looking.
Take for example Jan 1st 2020.
What you will notice is a consolidation at the 200W and a move higher the week after the JHEQX pin.
That move was a clear pivotal forward indication the market was going to crash in Mar 2020.
Now look at the week the fed began QE on Mar 16th.
This QE opened pandoras box of crypto, meme stocks, penny pumps, SPACS, and speculation nation that was 2020-2021.
Now that bonds have been decimated for over a year we are at a pivotal point.
JHEQX is set to expire today releasing a pin in equity hedging allowing markets to make their next move.
My plan the next month is to find a suitable long TLT position for 2025 leaps.
There are 2 gaps above in TLT weekly as a result of 2 major JHEQX pin weeks.
There could still be a drop in TLT the next few months if markets & banks hold strong in Q2 and fed remains hawkish into next hike.
A selloff in TLT next week (rates up) would most likely mark the bottom.
2020-2021 was an exceptional year.
So far the recovery starting in 2022 to now has had its share of exceptional sell off moments and capitulations witnessed for the Sept'22 CPI print.
TLT Volume Spikes UPDATED with ElliotwaveTLT Volume spikes prior to peak, when the fed first started raising rates. Now a volume peak right when the fed has said they will consider a pause for the next meeting. This could mean that the market thinks that rates are going to come down, and that therefore the value of long term bond assets will go up, as well as the value of banking stocks which are currently underwater. Previously, I mentioned that I though that the TLT would be going down, now I am updating this idea to include the notion that the fed may be done hiking for the short to long term, and that the TLT will be going up after experiencing large volume after a down trend.
TLT Long setupIt appears to me that TLT is now in the "value zone" Price now below the horizontal 11 day moving average of lows. I will watch carefully for upward penetration. Perhaps tomorrow and if not perhaps Friday with NFP. No guarantees this happens. Could continue to move lower. But if we get a rally I know where I stand and what I will do.
TLT Looking heavyTLT was down 2.35% on the day. If it can break the horizontal support, look for rates to rally and TLT to fall further. It has already broken rising trend support. If rates do continue to rally look for this to have a negative effect on tech stocks whose cashflows are highly sensitive to changes in the discount rate. All eyes now on the Fed. Lets see who blinks first them or the bond market.
TLT looking heavy.TLT was down 2.35% on the day. If it can break the horizontal support, look for rates to rally and TLT to fall further. It has already broken rising trend support. If rates do continue to rally look for this to have a negative effect on tech stocks whose cashflows are highly sensitive to changes in the discount rate. All eyes now on the Fed. Lets see who blinks first them or the bond market.
NASDAQ:TLT