TLT LongTLT has pulled back to a very key trend line with additonal supports coming in below. On the hourly chart, we have positive divergence on TLT meaning we should see upside soon in the short term. Given the postures of the markets and how treasuries act as a flight to safety asset, it is reasonable to assume they will go up in price as stocks fall.
For this trade, I advise picking up TMF (x3 leverage) with a stop anywhere from 28.00 to 26.60. I also recommend scaling into the position with 2 or 3 batches comprising your total allocation that you are willing to invest.
TLT
TLT - Staying sideways but should resolve higher thenWe are in a consolidation, currently in possible wave B of (4) and should soon see a push lower for wave C to around 133 before going back up again one more time for wave (5) before we see any deep retracement.
Notice that waves 4 are tricky as they can take any form of corrective pattern, zigzag, triangle or flat.
One more option is that wave 4 is in at 136 and we continue higher but for that I'd first like a move above 148.
Is it Time to Short Bonds and Long Stocks? With TLT at nosebleed heights the question obviously becomes, is it time to switch into equities yet?
As you can see TLT (red line) reaches fever pitch levels almost always at excellent entry points into equities, going back all the way to the GFC this has held true.
TLT for what it's worth is also extremely extended, driven to these heights on trade fears, slowing growth and a litany of over issues including the abundance of negative yielding debt, leading to increased interest in US treasuries.
But as traders we all know that nothing can go in one direction forever, what goes up must come down.
Stocks for their part look to be in 'hurry up and wait' mode, the September FOMC meeting will likely be the catalyst for the next move (both for stocks and bonds). If the fed provides the desired outlook (or direct rate cuts) that equities want then stocks will be the place to be, bonds too will benefit from lower rates (premium wise that is), but the liquidity will undoubtedly support higher equities.
Until the FOMC meeting, best to be cautious, but i for one would be careful about staying in bonds for too long.
SPY/TLT Equities vs. Fixed Income aka. Fixed ExpenseProbably the most basic rotation investment strategy, is the switching strategy between the S&P 500 US stock market (SPY) and long duration Treasuries (TLT). The SPY-TLT ETF pair is a very interesting investment strategy, because most of the time these two ETFs profit from an inverse correlation. If there is a real stock market correction, then Treasuries like TLT have always been the assets where money flows in, rewarding holders with nice profits.
M timeframe BULL
W timeframe BULL
50MMA acts as support BULL
200WMA acts as support BULL
MACD into negative territory probability to get positive BULL
RSI M 40 value acts as support in uptrend BULL
SPY/TLT correction 50% fib retracement BULL
RRR favorable BULL
RISK OFF last FEW months
RISK ON next FEW months
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TLT needs to touch top trend before reversingStocks are inverse to bonds. Take the measily little rate your being offered for safety? TLT needs to touch the top trend line once again before reversing. Worst scenario, it breaks through the top trend line, and we have a market crash with a sound you can hear on Mars. That actually could happen because we are in currency fantasy land. Paying someone to hold my money, store it? Crazy, stupid, makes no sense. I should go to cash, oh wait, go to dollars to be more specific. And when that happens, TLT goes through the top trend line, and panic stock sell happens. Just take a step back and have a long hard look at this big picture.
SPY: SPDR S&P 500 M timeframe BULL
W timeframe BULL
D timeframe NEUTRAL
GOLD/SPY turning negative BULL
SPY/TLT stocks vs. bonds turning positive BULL
US10Y overextended BUY
TRADE WAR hopes BULL
MARKET overreacted BULL
DATA above consensus BULL
% SP500 stocks above 200SMA > 50 support BULL
RSI > 50 momentum BULL
RSI support 40 hold BULL
VOLUME buy momentum BUY
MACD bears loosing momentum BULL
TRENDLINE false breakdown no LC W candle BULL
RECESSION IN THE NEXT 2 YEARS POSSIBLE
EXANTE is a broker for professionals. Direct access to over 50 financial markets through one account.
Stocks & ETFs, Currencies, Metals, Futures , Options, Funds, Bonds, Crypto¬currencies.
Any information contained on this website is provided to you for informational purposes only and should not be regarded as an offer or solicitation of an offer to buy or sell any investments or related services that may be referenced here. Investing in certain instruments, including stocks, options, futures , foreign currencies, and bonds involve a high level of risk.
2019: Long-Term Bonds > Stocks... Why?TLT has outperformed SPX by roughly 6% at time of writing. Many factors: FED cushioning rates, yield chasing by entities in negative-yield countries, fears of global slowdown, escalating trade war, and the perceived invincibility of U.S. markets.
There could be a seriously nasty rate spike within the next 2 years. As yields drop there is less incentive for entities to invest in bonds... if yields drop below the purported rate of inflation, which they already have (1.48% US10Y vs 1.6% PCE), there is no longer an incentive to hold them, as they produce negative returns. The deeper yields fall below inflation, or the higher inflation rises above yields, the stronger the momentum of a selloff. Will it happen? Free market forces would say yes, but considering the FED can print anything into a rainbow, the span and severity of such a spike is indeterminate... chances are that it will be uncontrollable for enough time to do some damage before the right players come to consensus on how to backstop it.
Long term we all know where this leads - negative rates for everyone, yay! A serious spike in yields should be seen as a patient opportunity. When the time is right, trade /TN, TLT options or whatever bond instrument you prefer.
US10YAn inverted yield curve (2/10) is an indicator but the 'cause'. Yields were 6%/5%/4% last times they were inverted and not 1.5% :) If corps can't afford to pay 1.5%, there is nothing Fed can do to resolve that issue. Policy issues are the cause and the cure is fiscal and not monetary. GL
Not a trading call, just sharing my view. Peace
Do you Feel Your Back Side Tightening Up?All right! let me see a show of hands. Who got long TLT when I told you to? Ok, it didn’t make it down to $110, but if you listened to me, you at least aren’t Feeling the Burn like the Head and Shoulders Short Sellers are!
Ok, if you are long the TLT, get ready for it to rocket up into the $130’s and really start inverting that Loan Curve!
TLT - 9.43 R:R ShortEvening traders, been a while since I shared my thoughts.
I'm looking to enter short on TLT, as it's approaching historic over-extension.
Let's dive in at the key points:
1) It's gapped up and will likely close outside the BB, should lead to down movement next week.
2) Short term squeeze has begun to trigger, this week is likely the top.
3) RSI is overbought and approaching historic levels.
4) Stoch is overbought
5) Percentage volume oscillator shows trend strength is reducing.
6) We have bearish divergence on money flow.
A re-trace towards mid bb band / .5 is likely in order, if the weekly 5 EMA is supported I will exit the trade as there would be another leg up in store. This should coincide with one more up for the markets.
From a fundamental point, after inversion I believe market continues for 7 months upward, yes, I know, this time is different. Rates are low, fed doesn't have much ammo, corporate debt is outta control, I know, I know. The chart doesn't lie though, I think we will have one more up in the markets before the big collapse, and it just so happens I believe bonds are topping temporarily now as well.
As always, hit that like and follow button and let me know your opinion!