TLT: Double Bottom, Buy LEAPS! Following our successful S&P 500 Index trade from last February, it is time to consider the next major trade of opportunity: TLT. This trade consists of buying January 2025 TLT LEAPS (long-term call options) currently trading for $8.50. That means TLT has to hit $108.50 before January 2025 for you to break even.
The Fed forecasts that the Fed Funds rate will be nearly 1% lower by the end of 2024. Some forecasters, however, predicts even lower rates. www.morningstar.com
Politics: With Biden running for reelection (likely vs Trump), political pressures may mount to prop up the economy, although that is beyond the scope of this analysis.
Nearing End of Hiking Cycle : In any case, we can confirm based on the Fed's own statements that its hiking cycle is nearly up. In the past two hiking cycles, TLT has surged significantly following the end of the Fed's hiking cycles, within 18 months of the end of each cycle. If the past two hiking cycles, are any guide TLT could reach levels of 140 or higher. Notably, the end of the 2018 hiking cycle led to a surge in TLT without a recession.
Venus Retrograde: for whatever reason, Venus Retrogrades every 18 months have recently corresponded with major changes in direction for TLT. The current massive selloff began in early 2022, and as of July 25, Venus is again in Retrograde until the first week of September. Thus, TLT is likely to once again reverse.
Technical Analysis : At 97, the risk/reward ratio of January 2025 LEAP Calls at 100 are a strong trade. TLT has made an apparent double bottom in an upward sloping linear regression channel going back to last October.
I'm going to buy some January 2025 TLT calls at a 100 strike and hopefully watch them rip by up to 10x over the next 18 months. Crypto doesn't give us 10x runs anymore, so we have to get creative.
