The Only Trade You Need to Make This Year. #SteeplongendThe long End Of Yield Curve will steepen.
Inflation running hot and CB can't hike rates.
Nobody will buy 20-30Y.
Yields Run, TLT Plummets
Double Top with Divergence.
Both, fundamentals and Technicals there.
This may be the only trade you need to make this year.
Everyone will continue to believe inflation is under control until they don't.
This is a trade we can actually see happening in front of us but, nobody has this priced in yet.
TLT
Spike Reversal Pattern on Bonds (TLT)Yesterday's close on NASDAQ:TLT broke the day's range causing many to think it was going lower. However, today's open reverses that sentiment by opening back above that short term range.
Bonds are a very cyclically trending instrument (see below) and at some point the down move of the last few days was likely to reverse. This could be the setup with a low risk stop to get long TLT.
Closing (Margin): TLT June 17th 2 x 171/153 Back Ratio Spread... for a 39.10 credit.
Comments: Opened this puppy up for a 36.45 debit on TLT strength. (See Post Below). Taking some risk off by taking profit here a little shy of my profit target, as I've got another short TLT setup on already (a March 18th 151/2 x 163 back ratio). 2.65 ($265) profit; 7.3% ROC.
20 year plus bond etfSince mid July, The price of the 20 year plus Bonds has touched or tested the top orange line about 8 times and has retraced 61% more times than not. Bonds going as low as $148 would meet the 200 ema and would be a retracement of 61% of the previous low. The previous has been broken. Let's see where the next level of support is. If this falls, the Yields should rise. Normally, stocks fall "for the most part" when this happens. Let's see if this holds true!
Short Bonds - why, and market review
Simple chart - There is a small dotted green line up top showing you divergence in the RSI.
You can see what happened, Bonds went way up. Now we have a much bigger divergence the other way in red.
So this sell off that saw the ES touched the 4500 area three times this week reminds me of the September low at 4250 same price action - which thrust up 500 points.
Both the Nasdaq and E Mini Futures returned to almost exactly 50% Fib weekly retracement - not luck, not a sell off in my opinion but just enough to confuse and liquidate a bunch of people.
I am short vol through a long position in SVXY outright and short bonds through TLT through 154 PUT options. The market is off the lows but most likely there will be an opportunity Monday to get in.
My upside target 4620 on the ES Futures to take these positions off - however I think we can go to ALL TIME HIGHS before puking epically - as the Fed taper is happening but we'll only get the details at Dec 15th Fed meeting.
If we get back to 4500 area in the ES - I will look to take a long positions through Futures, however did want that risk on over the weekend.
The orange arrows are a measure of volatility.
Six hour chart.
$TLT Retrace and GoThis also looked to be a valid bearish cipher followed by a possible bullish 5-0 patter. However, I decided to assume that a double bottom has completed its measured move and will follow DOW's law with a 50% retrace. I believe the trend is still strong and after the correction will reach newer highs. Personally, I'm long here but acknowledge the short-term downside risk. Good Luck!
Leading Indicators are BURNTAs forewarned, the Leading Indicators were previously pointing to a burn out, and now half of the leads are burnt.
JNK and VALUG are bearish, as are TLT and VIX indicating bearishness.
IWM, TIPS, and DJT have failed any bullish indication, skewing towards bearishness.
The S&P500 futures are at support now... likely to break down, even for the beginning of a month. Overwhelmed by the "shock" of a new variant, perhaps it is time.
IMHO, Omicron is a precursor... it should be mild, but its existence is indicative of the next wave. So, not to be ignored, and especially not to be forgotten. This is like Nature's forewarning of 2022.
Stay safe!
Opened: TLT June 17th 2 x 171/153 Put Back Ratio Spread... for a 36.45 debit.
Comments: Another put back ratio spread, this time longer-dated. Buying 2 x the 75 deltas and selling 1 x 50 delta to create a -100 delta short position in 20+ year paper on strength here. Will look to take profit at 110% of what I put it on for.
Bond to Bitcoin CorrelationHere is a brief correlation between bitcoin and bond price action. Hope you find this useful! I haven't been posting much due to what's going on in the economy. Switching up my approach. We all know when bonds rise, yields fall. When bonds fall, yields rise. Think about this when reading this chart. Good luck to the HODL!
Feel free to follow or simply keep up. I'm working on getting better always so bare with me. We all know what kind of journey this is!
Would love your support!
Opening: TLT March 18th 2 x 163/151 Back Ratio Spread... for a 23.99 debit.
Comments: Buying 2 x the 75 delta puts and selling the 50 delta put strike in the March expiry on strength here to create a synthetic -100 net delta short position with a 151.01 break even in 20+ year paper. Will start to look to take profit at 110% of what I put it on for.
Leading Indicators panel point to a burn outLooks like the S&P500 should be running out of steam soon, based on the panel of leading indicators which most are about turning.
JNK just about broke down and topped out a pattern.
Russell2000 and the broad market Value Line failed a breakout.
VIX and TLT are about to break out.
The ES futures weekly chart have indecisive candlesticks for the past two weeks.
While not a bear trend, a likely technical retracement due...
Heads up
TLT +.41% / While 20Yr @ High Yield of Month 2.06%Today's 20 Year Auction was sloppy and dangerous for Wood Panel FanBoys.
We released the Mastif's who chased Eddie Munster off our land.
Alexandra put a few 10 Gauge Triple Otts in Steve's BUttocks for good
measure.
Hopefully, this will suffice.
IF not - it's on to more persuasive actions. Alex adores the thought.
________________________________________________________________
www.treasury.gov
Bonds are seeing further FED Props.
Jit's Nasty out there for the 007s.
ZN is barely hanging on... Price Objective for ZN 129.55
Structure is Weakening
DOW at Session Lows.
Crude Dumpster Fire.
___________________________________________________
Bond Market Dislocations ahead.
TLT - WeeklyDivergences again for the Tilt - O - Whirl.
Just as the 007's were back to making 180 Hog Calls.
Signs, future signs, do not appear promising.
With a Failure to Break the Prior 152.71 Highs.
_____________________________________________
You have a large Bagel to contend with for now.
139s remain open as do 134s.
TLT - ROCs @ Mid Curve007s have been back announcing the latest "Sure Thing"
in Scottish Moors.
Just bring back the Wood Paneling, please.
We would appreciate Steve leaving our Front Yard.
_______________________________________________
TLT has not closed over its recent Highs.
All Bets at the Flamingo's Roulette Wheel are on 33.
_______________________________________________
With the 2nd highest ROC in a few weeks @ +7.75%...
Sightings of "Wrong Way Conway" @ Gilligans Isle/
We'll Oppose - as when we hear Metal to Metal contact,
loud crunching sounds, glass breaking, blood, and bags
of Frito Lays strewn about...
Train Wreck.