I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,725 Blog Posts

Stubborn Bonds

A critical component to equity inflows is the unwinding of the massive flight to safety over the last two years which has seen TLT, the ETF tracking long term treasury bonds, up well over 40% since the beginning of 2011.  TLT is a capital hog, but the daily chart has tipped in favor of downward momentum as I noted a few weeks back.

Updating my thoughts on the name, I still like the picture we’re presented in TLT and still give the edge to the downside; however it is becoming increasingly difficult to stay patient on the name.  Redman59 commented on a more neutral choppy bias, and thus far that seems to be the case.  $125.00 looks like a critical price level for bears to defend, and I could see stops being trigger above.  Downside confirmation I want to see is price below my 33 EMA on a closing basis (~$123.50).

Although my positioning in TBT won’t expire like other contractual positioning, being an ultra it does have time erosion.  Thus the stubborn bond buyers holding price in the stodgy high volume area has me taking to twitter regularly to decree “DIE TLT DIE!”  And as is always the case, cheering for positions on twitter makes you look like an overly emotional piker.

Indeed, we’ve rallied well despite the precipitous advance of TLT, but should we see the trade lose steam, well, that capital has to go somewhere and I believe it will seek refuge in the mega cap stocks.  All this would bode extremely well for a bullish fourth quarter USA#1 rally.

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  1. Sur Platonic Plateau Du Tecnocrats, B.R.A., D.J.D. upon Rookness.

    I remain confused.

    What’s your point?

    That you’re a quasi-piker?

    Or that you want to make money in $TBT?

    Please drive a point more clearly.

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    • Raul3

      My point, Sur Duke (Duchess?), is yes, that I want to make money in TBT.

      Let me be clear, I’m positioned for lower bonds, and higher banks.

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  2. redman59

    Thanks for the mention. This upside velocity was expected but still expect some mean reversion and as you highlighted the overall trend is still down and this may be a good short opportunity…who knows but can only react. Friday NFP could put this thing in a more determining direction.

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