TLT – Lehman Bond ETF (Last:106.29)

The nasty, two-day plunge that ended the week has set up a paradoxically appealing ‘mechanical’ buy at the green line (x=106.12, stop 104.65).  The best ‘mechanical’ trades are supposed to look scary, and this one certainly does.  I can’t guarantee that a round lot bought with a 106.12 bid will bounce all the way to D=110.49, but I’d say odds of at least a one-level rebound (i.e., to p=107.57) are about 80%. If you’ve been paper-trading the more frightening ‘mechanical’ set-ups, I’d suggest that you sit back, relax, and continue to keep score in order to develop enough confidence to trade them with real money.