I outline how I was bullish on TLT when it was pulling back in Feb-Mar because US Rates were high relative to Foreign Gov't Bond rates. It made sense that arbitrageurs would buy the US Gov't Bonds and Sell Short Foreign Gov't Bonds to drive prices back together. Oddly, the rally that came after that into late March-early April has been disappointing and made me question why couldn't all of this QE get the market to move further.
I felt that TLT was losing its momentum, and when I pulled up the 63 day rate of change, which is one quarter, and saw that the momentum had shifted to negative for the first time in awhile, that something was wrong with Bonds. If a market can't rally in the face of very bullish fundamentals, then a shakeout is normally the next thing to happen.
I targeted 127 initially and we are close of today with 127.89 low today.
Tighten stops to breakeven or to slightly profitable around the 130 level. Any rallies from here can be safely shorted to the 129-129.25 area and target 127 on those additional shorts.
HYG is doing well relative to TLT, so if you swapped out of TLT into HYG then you are doing fine. Graph the ratio by entering HYG/TLT in the quote box and see it has appreciated by several percent.
Cheers.
Tim
1:34PM EST, April 22, 2015 128.20 last TLT
Komen
timwest
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NOTE: "Any rallies from here can be safely shorted to the 129-129.25 area and target 127 on those additional shorts. " TLT is up to 129.43 at today's high - perfect area to add to shorts here. 127 target. 128.87 last TLT. 12:25PM EST Friday, April 24, 2015
timwest
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TLT declining just perfectly according to normal trending patterns. Looking for more downside here... 127 next target.
Justiceisfalse
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Very nicely done. You have had a few very sharp calls as of late. Keep it up!
timwest
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Thanks. I hope I can stay in rhythm with the markets here. The markets are always telling us a story, sometimes we don't listen and other times don't like the story and sometimes the market tells us lies. Either way, thanks for the nice comment.
timwest
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The TLT is going to be down to a great level to cover shorts on the open here.
timwest
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TLT is going to gap down UNDER my target of 127 this morning, giving us a better exit than expected. The pre-market indication is 125.50-125.70 at the moment. Cover all shorts here. :-) Great trade.
Justiceisfalse
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Your GPRO long also came in great. I have no position.
jangseohee
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if price breaks UP of the neckline,
it could be a massive RISK ON!
jangseohee
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Tim, i reckon price is gonna fill that 125 gap first and your 119 level is pretty possible, should the blue channel support be broken
(If SPX breaks on the UPSIDE, TLT will fall more?)
timwest
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I do regressions from the lowest low of the rally to the highest low or the highest close of the rally. Check it out when you do it that way it will be consistent. The gap is good support indeed. Hope you don't mind the suggestion to try a different way to place your regression of the "trend". Cheers! Tim