Using call options, we’ve been trading an ETF proxy for this vehicle, TLT, but have been on the sidelines lately waiting for the correction from mid-October’s spike high to run its course. You can just look at the chart and sense not only that recent price action looks like consolidation for an eventual move higher, but also that it could take more time for the process to finish. Assuming the point ‘C’ low of the pattern holds — an outcome which I do not strongly expect at the moment — the next major thrust would put the futures on course for a flight into outer space. Specifically, a Hidden Pivot target at 152^27 would be in play, implying new record-lows for long-term interest rates. Traders should approach entry with a bullish bias once 143^13 (green line) is touched, and to be even more aggressive following the breach of the ‘midpoint pivot’ at 146^18. Both of those benchmarks could change if the futures head lower first, but that would not alter the very bullish look of the chart unless 140^08 were exceeded to the downside.
