Based on a report in the chat room from a subscriber who has been long call options since TLT bottomed two weeks ago, I’m establishing a tracking position: long two April 17 129 calls for a CREDIT of 1.68 apiece. The subscriber bought the calls using a 124.50 correction target I’d proffered, and although TLT subsequently went lower, bottoming at 122.97, the subscriber held onto the position because I had not suggested a stop-loss. She cashed out of half of those calls yesterday for 3.30 — more than four times the 0.81 she paid. I have imputed the gain thereof to the cost basis of the call she still holds. (She bought two contracts, but our standard practice is to start with a multiple of four; that’s why the tracking position is two contracts.) For now, do nothing further. If perceptions grow that Fed tightening has been pushed back indefinitely, the nice rally in T-Bonds since early March is just a warm-up. This is notwithstanding the pullback I expect in this vehicle from 131.72 (see inset). I still see long-term rates falling below 2% — perhaps as low as 1.74%. _______ UPDATE (March 20, 12:15 a.m.): Since few subscribers appear to be on board, I’m going to look for a low-risk entry opportunity suitable for novices in the days ahead. One possibility would entail legging into a $1 or $2 vertical call spread at no cost. We’ll need a day or two of weakness to make this work, so stay tuned to the chat room for real-time guidance if you’re interested. _______UPDATE (March 22, 6:12 p.m.): My latest update for T-Bond futures is very bullish, implying we may not be able to get long in this vehicle on a leisurely pullback. Subscribers eager to board should interpolate the T-Bond forecast to craft a camouflage entry strategy. This implies using the 1-minute chart to jump on the first micro-ABC pattern that offers the enticements we typically look for. _______ UPDATE (March 26, 12:10 a.m.): Yesterday’s selloff occurred without TLT having achieved a minor rally target at 133.31. This is a mildly negative sign for the short-term, but the target will remain valid nonetheless as long as the downtrend does not exceed 130.27. _______ UPDATE (March 29, 5:47 p.m.): Squirrely price action hasn’t affected the bullishness of TLT’s long- or short-term charrts, although it has slightly altered our target for the near term. Friday’s stall at p=131.18 has validated the pattern, and although we shouldn’t try to predict whether the resistance will be breached, we ‘know’ that if and when it is, TLT will be bound for exactly 133.29.
