Despite the hellacious dive over the last ten days, TLT is on a double buy signal. The more important of the two is shown in the weekly chart (inset). An 88.47 bid would require a stop-loss at 84.88, just beneath the pattern's point 'c' low. You can see how close the low came to stopping out the position, but it held nonetheless -- by 12 cents. T-Bonds were bound to turn around sooner or later, and the chart says this would be a logical place for it to happen. Odds that a major low is in place would shorten if this so-far modest bounce can push past D=88.39 of this minor pattern. _______ UPDATE (Apr 17): The tout above sniffed out a strong bounce, but not quite strong enough to lift TLT from the danger zone. That would require a thrust exceeding the 88.91 'external' peak shown in this chart. My hunch is that bulls lack the gusto for this task, but we'll give them the benefit of the doubt when trading gets under way after a long Easter holiday weekend. _______ UPDATE (Apr 21, 4:25 p.m.): Today's carnage clarified a picture that shows an easy path down to 74.38. If this comes to pass, T-Bond futures could fall to as low as 100^12 by mid-summer.
This symbol was setting up for a textbook 'mechanical' buy at 90.61 when last week began, but the green line where we typically do the trade got crushed, negating the opportunity. A new one subsequently materialized with a rally target at 91.49, along with the possibility of a fresh 'mechanical' trigger if TLT drops back to 89.35 (stop 88.62). The crosscurrents have left me mildly bearish, and I would grow moreso if TLT closes for two consecutive days beneath 87.81. That would portend more slippage to as low as 82.83 (daily, A=94.85 on 12-6). _______ UPDATE (Apr 3, 10:42 p.m.): Buyers popped through p today with enough force today to make more upside to D=94.56 an odds-on bet. _______ UPDATE (Apr 7): It is terminally discouraging that TLT collapsed without quite having reached my 94.56 target, but also without having taken on the 12/6/24's 'external' peak at 94.85. I don't know that TLT can recover from this failure. If TLT were my kid, I'd leave him at the firehouse.
TLT launched sharply higher from within 8 cents of the 89.47 Hidden Pivot I flagged here two weeks ago. The thrust generated a strong impulse leg on the intraday charts and established a trigger for a 'mechanical' buy at the green line (x=90.61). Friday's low at 90.62 missed by a penny, but the signal will remain viable. The implied 89.37 stop-loss is too wide to be practical, so I suggest using a 'camo' trigger to get long. That means dropping to the 15-minute chart or less when 90.61 is touched and fashioning a reverse-pattern set-up with a corresponding entry trigger.
TLT has broken out with a stab on Friday that not only penetrated a major midpoint Hidden Pivot resistance at 92.04, it also closed above it. If the uptrend continues for another day or two, it will affirm the likelihood of more upward progress toward p2=95.62, the 'secondary pivot'. I was skeptical about the strength of the trend earlier because discrete thrusts were not exceeding 'external' peaks on the daily chart. But the uptrend's resilience has been affirmed by a corresponding move lower last week (see my TNX 'tout' below) in 10-year yields beneath a crucial support at 4.24%. ______ UPDATE (Mar 7): The breakout was short-lived, but because it generated a true impulse leg by exceeding two prior peaks, one of them internal, the other external, bulls deserve the benefit of the doubt. If another strong leg is coming, this retracement should find traction at either 89.47, a few ticks beneath last week's low, or at 88.08, my worst-case, smackdown low. Here's a chart to orient you.
TLT has taken three big leaps since bottoming in mid-January, but only one of them exceeded an 'external' peak. Still more dispiriting is that the last sputtered out almost precisely at an upward correction target, well shy of an important 'external' high at 90.99 recorded on December 17. The rally appears to have been a garden-variety correction in an ongoing bear market, although we'll give bulls the benefit of the doubt until such time as the pullback starts exceeding prior lows. The rally corresponds to a drop in Ten Year interest rates that appears to have bottomed synchronously near a Hidden Pivot support at 4.43%. The downward move in rates began in mid-January from 4.81%.
The rally from mid-January's low may seem impressive, but don't expect much to come of it. The ascent has occurred in two discrete upthrusts, neither of which exceeded an external peak. The failure to do so was a matter of inches, but that's all the more telling since it demonstrated that bulls manifestly lack the vigor and conviction to generate impulse legs on the daily chart, let alone effortless ones. I'll remain skeptical until such time as TLT pops decisively above the 88.91 peak notched on December 20, then stays above it for two consecutive days. _______ UPDATE (Feb 5, 10:19 p.m. EST): I've been fighting off every bullish sign, but there is no denying the bullish implications of today's breakaway gap through a clear Hidden Pivot target at 89.81. Buyers will need to do a little better, pushing past the 90.99 'external' peak recorded on December 17, to demonstrate their new prowess, but that shouldn't be a problem given the power of today's move.
The top of TLT's leap last week fell a crucial dime shy of an 'external' peak at 88.28, spelling possible trouble for the first turnaround attempt since November. With a so-so 'mechanical' buy in prospect when the pullback touches x=86.25, we'll give the recovery the benefit of the doubt. The picture would brighten if the move off x reaches p=87.61 within a day or two. That would shorten the odds of a further run-up to d=90.32, but a slightly higher would be needed to clear a second 'external' peak at 88.91 from 12/20. _______ UPDATE (Jan 27, 10:38 a.m.): TLT's big and probably phony leap this morning conspicuously failed to surpass any prior peaks. We'll leave our benchmark for the real McCoy at 88.91.
Is this move for real? I doubt it, but we'll let the chart tell us what to think. So far, last Wednesday's bear-trap opening looks only superficially impressive, since the follow-through failed to get past the 87.61 midpoint resistance (p=87.61) shown in the chart. TLT is a lock-up to reach it, but the upthrust would still need to vault an 'external' peak at 88.28 recorded on December 3 to demonstrate staying power. A decisive move through p would shorten the odds that d=90.32 will be reached while also lending credibility to the rally. If it is more than just flash-in-the-pan, performance measured against this pattern cannot but tell us the story.
Last week's spike surpassed an important peak at 4.74% recorded last April. On its way to a presumptive high at 5.55%, the rally will face additional resistance at 4.87%, a 'voodoo number': and at the 4.99% peak notched in October 2023. If these invisible impediments do not put up a fight, it will increase the likelihood that the 5.50% target will be achieved. The two years TNX spent head-butting the midpoint resistance at 4.01%, then trying to break free of its gravitational pull imply there's a chance the rise in rates will abate somewhere close to the 5.13% midpoint between p2 (47.59) and D. ______ UPDATE (Jan 18): Rates on the 10-Year have rolled down from somewhat below the 4.87% voodoo number, but I'm not ready to infer the uptrend is weakening. Let's see if this presumptive minor correction can catch a bounce from this pattern's 45.22 'D' target.
I've lowered my target for Treasurys so often that it's time to face the music. The 73.69 'D' Hidden Pivot shown in the chart is where this ETF proxy for the long bond is probably going, and it is not a pretty picture. The punditry, editorialists and Bloomberg bozos can blather all they want about the economy's supposedly soft landing, but this is wishful thinking. Interest rates are headed even higher, and this will crush markets that owe their artificial robustness to easy financing; cars and houses, to name just two. It will also turn the irreparable devastation in commercial real estate into a catalyst for the Second Great Depression. The chart pattern is too clear to deny, especially since it has already worked several times to produce profitable 'short' trades on the way down. A second test of p2=85.44 could conceivably turn this cinder block higher, but we shouldn't look for miracles. ______ UPDATE (January 5): TLT continued to hover near death's door, extending its distributive, sideways scuddle for another week. It would need to pop above 88.91, an external peak shown in this chart, to emerge from purgatory. _______ UPDATE (Jan 10): TLT stopped scuddling, the better to plunge anew. It ended the week with an imminent test in prospect of the 82.42 low recorded in October 2023. A two-day close beneath it would all but ordain more progress down to 73.69, a target that would have seemed unimaginable when this symbol spiked to a covid-era peak at 179.70 in March 2020.
