The following is an excerpt from my latest Weekly Strategy Session, which I published on Sunday for members (12631 subscribers receive the Strategy Session each weekend, at no additional cost).
Speaking of established downtrends, Treasuries are still in the spotlight and will continue to be with the FOMC this week.
The TLT ETF is attempting a double-bottom, denoted by the lower light blue on the daily chart, below. The most likely scenario is that The Fed either does not taper its asset purchases at all, or rather mildly tapers them.
Thus, a viable thesis is that Treasuries have already priced in a prospective taper, rendering them a likely buy at these levels. If that is the case, $104 and $106.30 are your upside triggers for an aggressive counter-trend long in Treasuries, with TMF being an even more aggressive, triple-levered long ETF.
Treasuries are another downtrending asset we have successfully played on the long side in recent months. However, this time around I am concerned that the rally attempt has taken a bit too long is gaining steam, on top of perhaps too many traders playing for that countertrend bounce.
Therefore, maintaining stop-loss discipline below recent lows of $102.11 is critical to not being washed out with trapped bottom-pickers in another leg lower, particularly if the FOMC surprises with some hawkish tones later this week.
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