Today’s devastating smash suggests the longstanding, 117.23 correction target could be reached sooner than we might have expected. However, because the intraday low occurred just three cents from the 119.47 Hidden Pivot support shown, this vehicle is arguably a spec long from these levels. Typically, we try to leg into $1 or $2 vertical call spreads for no debit, but it may be difficult because, on days when this vehicle rallies, it tends to open on a gap perhaps 80% of the time. An opening slightly below the 119.47 pivot could be worth bottom-fishing, however, provided you use ‘camouflage’ to catch the ride north. Please note that if you move point ‘A’ up to the next peak, two more Hidden Pivot supports, each capable of engendering a tradable bounce, come into view: 119.26 and 117.83. The lower number could turn out to be important, since it’s close enough to the long-term target to be a potential major turning point. _______ UPDATE (8:38 a.m. EDT): TLT has banged out an overnight low overnight of 117.80 — three cents from our secondary target. The bounce so far to 118.89 was steep, but any trading opportunities that remain for us will depend on where this vehicle is gamboling at the opening bell. The original target at 117.23 remains valid and could offer a low-risk spot to attempt bottom-fishing. _______ UPDATE (May 13, 12:30 a.m.): The rally was less than we might have hoped for, having failed to surpass a shelf of resistance at around 120.76 from a day earlier. _______ UPDATE (May 13, 1:17 p.m.): During this morning’s tutorial session, I flagged a potential opportunity in TLT — legging into a $1 vertical call spread (May 22 119/120) if the stock comes down to the 117.75 target of this pattern, on the 60-minute chart: A= 126.17 (4/30); B=120.37 (5/6). I extracted a promise from three of the students to actually ‘do’ the trade. The first who reports having done so will get a month added to his/her subscription. Everyone else would still have the prospect of a $400 profit and zero risk, assuming you are able to short 120 calls on the expected bounce from 117.75, for as much as you’ve paid for the 119 calls. _______ UPDATE (May 17, 10:27 p.m.): TLT lurched higher Friday with an opening gap that left our 117.75 correction target in the dust. The target remains theoretically viable nonetheless, but we’ll put it aside for now while we wait to see whether this rally ‘gets legs.’ _______ UPDATE (May 18, 9:47 p.m.): One step up, two steps back. Yesterday’s vicious selloff has brought the 117.23 target back into focus. Bottom-fish there aggressively with a tight stop only if you’ve caught a profitable piece of the ride south.
