TLT ShortTLT broke below support and is targeting $100-$101
Current play holding $106 puts for November
TLT trade ideas
TLT: Order Flow, Auction Process & Failures To RotateHey traders,
If we zoom out to check the price action in TLT from a daily perspective, what do you notice?
Every single time there is a failure to rotate (hinted via diamond labels), the new expansionary wave leads the market towards a new equilibrium point that so far has been found at much lower prices.
I’ve circled each and every instance where these failures to rotate back up occurred. Each market is an auction process, and via the OFA script , we are able to get a pristine read of the constant ebbs and flows.
The structure depicted via the script should also be a clear red flag that in this type of well-anchored bear market, being a hero typically gets you in trouble, so stay with the trend.
Remember the two key main features of the OFA indicator:
Magnitude: A major clue that will help determine the health of a trend is the type of progress by the dominant side in control of the trend. We need to ask the following question: Are the new legs in the active buy-sell side campaign as identified by the script increasing or decreasing in magnitude?
Velocity: When it comes to the distance the price moves, the magnitude is only ½ the equation. The other ½ has to do with the velocity of the move or the speed. Was the new leg created after a fast and impulsive move? Or did price make a new low or high with the movement being sluggish, compressive and taking too long to form? A good rule of thumb is to count the number of candles it took to achieve a new leg.
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$TLT - 20Y Bond index - BUY?Clearly, inflation is a problem and I for one thought the rates rising were overblown after the first hike. (I was very wrong here) With that said, we are likely in the topping process for inflation, pending any new black swan events happen. The indicators show 4 things in regards to this bond. 1. No momentum, 2. Bear market trend 3. below the historical anchored V-WAP (so most who own this EFT are underwater) 4. Bottoming on a Fib.
The best way to play this is to buy tail-risk long-dated calls. Keep position small given the macro market, but clearly, this is an opportunity that hasn't been available for a while in the bond market.
TLT at support but for how long?TLT the ETF of 20+ year treasuries has dropped to a support level last seen on a significant trend change in 2013. 20 year yields are at 4.17% at the moment. This means that if yields were to rise to say for example 6%, TLT would fall to approximately 70$ a drop of 30%.
TLT Bottoming....Head & Shoulders TP Zone imo. Yellow line marks the spot. From here, check for a sign of reversal. Possible sideways for a bit, or possible continuation down.
TA is based of Support levels and H&S Target. MACD showing Bull divergence.
$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.
TLT @ Triple junction MEGA support - Technical bounce to $115 TLT has been in downward channel since COVID 2020 highs. Currently it's hitting at a MEGA technical level which has conjunction of triple support trendlines as shown in the chart. TLT might go down till $104 before a short term technical bounce to $115-$116. However my medium to long term target for Treasury bonds is $95 and $85, with Fed increasing interest rates, bonds will be out of favor for some more time.
Ok that's it....Publishing this chart, I have been wrong on TLT for a while now. although I don't think my charting is completely inaccurate. So I welcome ideas and your opinions if you're willing to share.
I believe this is significant time and that we are at the convergence of both technicals and macro factors.
Technicals :
We are on the support line that was created by the two lows on mid-Dec 2016 and late Oct 2018. that Support line coincides with the the apex of the falling wedge that originated on March 15 2021 - the Statistics about WEdges aren't the best. Numbers show that they are not very reliable at indicationg a trend reversal (Encyclopedia of Chart Patterns by Bulkowski).
While I am hopeful this would be part of a bottom formation and reversal, I am not super confident. If we break that 106.... there is lot of downside to come.
Macro :
Wednesday will be the potential 100bps increase by the fed which would result in the sentiment that peak inflation seemingly behind us and the possible "official" announcement of recession seem to be the most important factor for a bounce in TLT.
Ok, so I would be bullish from here and will DCA a bit more this month.
Hope this helps.
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
Recessions and the Flight to SafteyEven though the great recession was ongoing for almost a year prior to being dated by the NBER, it was the announcement itself that started the massive migration from stocks to bonds. The purple square encapsulates this time range. It is best to enter this position before an announcement, which some market participants did.
At the current growth rate, we will be in a recession anywhere around October - January, after mass layoffs result in unemployment across the economy. The NBER has responded more quickly in dating the more recent COVID-19 2020 recession, which lasted only a few months and announced around four months after it started.
relief rally at 11212-116 area where there is major support dating back to 2018.
short term buy
midterm neutral
long term sell
Mixed picture on TLTTLT the long term Treasury ETF had been showing itself to be fairly resilient in recent weeks. However it is now trading below a key level of 108 which I'm sure some investors would regard as a sell signal. Could be more downside to come but I would expect strong support at the 101 level of the 2013 low.
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.
Crash Incoming 11?Another simple and yet concern chart, at least for me. An almost perfect inverse correlation, right? There is a (high?) probability that the blue line (TLT/SPX) is about to go up towards the yellow line (S&P500)? We will see...
$TLT is in over sold territory $TLT is in over sold territory. And nearing a long term demand zone. Going into the crescendo of a bear market would it be a good idea to go Long $TLT and short $SPY ? However timing is everything.
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,
Long Term Bonds Key LevelTLT daily is on key support as long term bond yields soar which is bearish for stocks. You can Also get a case where long term bonds rally and yields fall which is also bearish for stocks if short term yields continue to rise at the same time. This will likely be the case if the Fed pivots. By that point the yield curve has already kicked up at the short end resulting in a heavy landing recession.
Reaction Point Coming Soon...We're approaching obvious fib levels and a reaction line where this downtrend might reverse/bounce soon.
CTS - Treasury 20Y20Y Treasurys. So much debt. So much fear nearby. Good risk profit for me at last.
Give it a like, share. 👍
Dump likely to pauseThe countercyclical correllation when bonds sell off same time with stocks is likely to end, because investors need actial yield.
TLT daily wave count EWTLT on daily chart appears to be in the c wave of the abc retracement after the motive wave completion. Projecting to reach $120+.
TLT previous support level reachedWith hidden daily bullish divergence at this support level we SHOULD see some buying start to happen. If not, the channel will break and it will look like they want to test the lows. This week's closing candle is very important. Under 111 will look ugly on a daily close, under 110 even worse.
$TLT - chart update and investment. This is where I will be parking 401K money for the next 6-12 months. Large $TLT gap to fill at $168. Bonds will outperform as the market declines one last time before the recession. NFA/DOR
