TLT trade ideas
Get ready for TLT tradeTLT chart pattern suggested it might be bottomed and ready for 40% gain (as Dec 2013 and Feb 2017). 10% draw down is possible, but given the potential gain the risk is worthy to take. So risk 10% loss for potential 40% gain.
NQ Still In a Zone, But the Action of TLT Will be a Good "Tell"If TLT breaks down, then the odds of NQ breaking down go way up.
TLT - Possibility of Big Gains to Year EndAs recent estimates indicate that inflation is past the 10% level. I have come across some writings that indicate that a spike to 5% on the 10 year might not be out of the question. Reviewing TLT, a 20 year bond ETF, I saw that the last time TYX was at 5%, TLT was around 80.
I took an initial position in 140 Puts yesterday and will continue to add on with any counter-rallies. Given the current trajectory, it appears the trend can take TLT down to 120 by the September option expiration. Seems that historically, there is a lot of play between the 140-120 levels.
I don't really like playing TLT options but am not fond of TBT either as it is a derivative that tends to erode faster than profits can grow. TLT options tend to be thinly traded with wider spreads than what I am used to. Shorting TLT options has also been problematic as if you are short an in the money option, even as a part of a spread, one can find oneself being short the stock come dividend payment time.
In the past, a rise in interest rates has negatively affected the precious metals. Many of you who follow me know that for the past few years I had been building up the PM paper and physical positions. This correlation continued until last March when everything crashed. Since then, PMs have outperformed. I'll add the chart below.
Does seem that eventually, same as with the PMs, that the manipulators will no longer be able to control interest rates and that both rates and PMs will explode higher. The Fed would likely add even more supply to the dollar market should interest rates increase, in theory that should boost the PMs but in the end, as the US continues to erode into Venezuela, one can expect both interest rates and PM prices to rise. Unfortunately, playing the paper markets are no better than playing Monopoly. While the paper profits may rise, the dollar value will fall.
Still, physical PMs are the best bet, but if you enjoy playing the markets, TLT shorts may be an interesting play going forward. At worst, it would be a hedge against any long PM positions.
Long Term Treasury Bonds Doomed?- This chart does not include any fancy lines or indicators because when it comes to bonds, they simply do not matter. The main catalyst and arguably the only one that matters, is the Federal Reserve's monopoly on interest rates.
- An overwhelming majority of fed members have come to the (quiet) realization that lowering interest rates any more would create a perfect storm for hyper inflation and the utter downfall of American society as we know it. I am a firm believer that the US Dollar will no longer be the reserve currency of the world after this mess is cleaned up.
- The FOMC has clearly stated that they do not plan on raising interest rates until the year 2022. However, I believe that the fed knows that they have painted themselves in to a corner and raising rates is the only way out. This rate increase may very well come sooner than most expect.
- The final questions we must ask: Would the fed rather keep the USA in the lead when it comes to owning the reserve currency of the world? Or would they rather hike rates, keep their reserve currency status, and cause a massive negative ripple effect throughout the entire economy for an uncertain amount of time (in hopes that they could once again lower interest rates in the future).
- Both scenarios will be horrific, but I am starting to believe that the second question would be the most favorable outcome for all of us.
The comment section is open to opposing views, but I ask that you also leave an answer this question: What would you do if you were the Federal Reserve?
TLTInteresting setup on TLT with it consolidating at the 0.618 retracement and 200 weekly sma. Everybody is saying rates are going higher, but are they? TLT isn't so sure yet. Should get a great tradeable bounce at minimum whichever way this consolidation resolves. Watching for now.
$spy $tlt vs $tip Inflation trade is over for nowJust look at Thomson reuters crb index and the probability that the dollar is bottoming. Barron's article points to everyone being bullish on inflation trade and boat is tipping to one side decidedly. we could see an uptick from ST oversold condition to con't a little bit, but I expect that commodites have topped for now and will consolidate for a while before next run higher.
$QQQ Institutional VPOC buy area while $TLT bonds selloff
$QQQ has found support at VPOC area where the indicator shows us heavy accumulation of buyers on the given range. Also note the trendline support it is respecting.
$TLT given the fears of inflation and the Federal Reserve hinting at raising rates, bonds continue to sell off in an environment that remains RISK ON. As Job numbers continue to grow in a strengthening economy, we want to look for slow growth in employment numbers in order to remain bullish on QQQ. A blowout in job numbers can seem bullish to the retail eye, but this is when the Federal Reserve will most likely raise rates and surprise the market. Would not be the first time the Fed surprises; back in 2011 the entire market was pricing in a taper but the Fed came out saying they will continue Quantitative Easing which sent shorts running to cover.
$TLT technicals point bearish with a breakdown from a rising wedge and a bearish MacD
The only Bullish scenario for TLT would be if Powell decides to bring rates into the negative which would send the financial sector into a free fall.
- Daniel Betancourt, OptionsSwing Analyst
$TLT - Michael Burry's bet on inflationAs many traders have been made aware due to the 13F filings, Michael Burry is short on a lot of things. With over half of a billion dollars in TSLA puts, one might assume he wants the EV manufacturer burn but there's more to it than just that. Over 2020, to stimulate growth in the market and in the economy, the fed dropped interest rates to 0. While they didn't stay at 0 for long, the low rates were incredibly bullish for these growth centric companies. Think TSLA, ROKU, SQ, ZM, Cathie Wood, etc. Companies that are traditionally very OVER valued when looking at their P/E. These low rates enabled investors to price in years and years of growth ahead of schedule. Now, in 2021 the headline of the year has been INFLATION. Everywhere you look you see tech (with their inflated P/E ratios) crumbling, value stocks climbing, fear of dollars becoming worthless and pouring into commodities whether that's oil, lumber, crypto or metals.
Michael Burry's true portfolio is not one directed at Tesla specifically, but one betting on inflation to catch up with us. While TSLA makes up a large portion of this position, he also has 170M in TLT puts and 55M in TBT Calls. Bringing his portfolio to a net position of roughly 760M in derivatives betting on inflation. Most interesting to me anyways is the TLT position. TLT runs inverse of the 10 and 30 year bonds. Last year as rates went to 0 to encourage spending, TLT shot up 18% in a week. This current climate of near 0 rates are fantastic for financing (because if you can lock in a 30yr mortgage for 3% and inflation is 3%, that's essentially borrowing money for free. For 30 years. While an asset appreciates), but the spending is not beneficial for the valuation of the dollar.
As of December 2020, nearly 35% of all US dollars in existence were printed in the 10 months prior. There are two ways in which a functioning market would pay for this, one would be increased taxes which have been proposed but not passed. The other is through inflation devaluing dollars and increasing relative cost of goods. The latter is much more expensive but generally goes under the radar. At some point the Federal Reserve will need to SLOW DOWN the the economy. The most likely way for this to happen is to raise interest rates making borrowing money more expensive.
From a technical point of view the US 10 year bond is bull flagging on a larger time frame, this is probably the most consistent bullish pattern and is line with the point of view of the Federal Reserve raising rates ahead of schedule. Conversely, TLT is bear flagging on the weekly, so there's no divergence there which is great for Michael Burry's analysis. In addition to TLT's bear flag, it's on the verge of breaking below a decade long support line it's followed and is on it's 200 day moving average.
Jerome Powell has stayed true to his word thus far and has, honestly, done quite well in keeping the market afloat and strong over the last 14 months or so. The real question is whether or not he was wrong in his assumption that rates can stay low for as long as he's promised and if inflation is truly under their control.
Warwick, OptionsSwing Analyst
$TLT when Burry shorts...It's time to rethink my calls...not that one person is always right, but it would be dumb not to consider it. Going to likely pull out of my calls tomorrow...
Rolling (IRA): TLT July 144 Covered Calls to August 143... for an .80/contract credit.
Notes: With the 144's at 50% max, rolling out and down to the 28 delta strike in August. Total credits collected of 7.93/contract (See Post Below) versus a short call value of 1.61 = realized gain of 6.32 so far. I last acquired at around 110/share, so am fine here with being called away (even though I don't think that's going to happen). Similarly, I'm fine with collecting short call premium + the dividends, which are nothing to write home about -- the May 3rd dividend was a whopping $20.31 per one lot.
Long Term Bond Prices FallingWe have break out of what appears to be a bear flag on TLT today. Next level of support after this break up appears to be around $128 and $122.
CPI report today confirms fears of inflation, thus bonds prices will fall and yields will rise.
The Bond Bear Market is just beginning!The Bond Market will continue to sell off as this inflationary cycle continues! These are my next target but I think this is just the beginning.
TLT20 sma crossed the 50 sma last week. Keep an eye on bonds early this month. Wouldn't be surprised to see a 100 sma test sometime in May. Inverted h&s target around $146 if above $140.
Rolling (IRA): TLT June 18th 145 Calls to July 144... for a .71/contract credit.
Notes: A continuation of my TLT covered calls (i.e., shares of stock + short call). (See Post Below). With the 145's converging on 50% max, rolling out to the July 144's (28 delta) for a .71/contract credit. Total credits collected of 7.13 versus a short call value of 1.49 = realized gains of 5.64/contract so far on the short call premium end of the stick since December.
Rates down...FED sets lowerFED is setting low rates, its a short market. So dont buy 'on price'. Weekly charts shows a pretty clear setup.
I am not personally shorting, but that is a matter of capital placement including returns in crypto.
20 YR Bonds, Interest at these levelsLooks like investors are slowly but surely moving into safe assets such as bonds as we have currently hit bottom and can see some slow consolidation before a breakout.
TLT - Monthly pivot break upAre they going to try and bust this through the Monthly Pivot (white line)?
Lets see...
a hedge to taxes what to do with a %43.3 capitol gains tax
buy nontaxable assets like government bonds
when the demand for those bonds goes up so will TLT
this is on the weekly and the MACD and RSI both look like it is time to go long
when big money catches on to this method the options chain can go crazy
