TLT / TBT (trade) Update

There's been quite a bit of interest in TLT trades, both short and longer term, since TLT is looking good for a short term trade (short) right in this area (I know some of you have been waiting all week for a TLT short or TBT long which is a current trading position long which is down about 3% since opened, but for a 2x leveraged ETF, I'm not concerned at all about it) I thought this was a good time to update the charts.

 This is a 5-day chart of TLT (20+ year Treasury Bond Fund). You can see what looks like a H&S top , a stage 4 decline, which only declined about half of the measured move if you draw the neckline perfectly horizontal, but there are many different sloping necklines for a H&S and if you draw the neck line from the left reaction low to the higher right reaction low, the decline is actually exactly at the measured move target. In any case, TLT seems to have built a base in the area of $102 which is the measured move target of a H&S that's drawn like this which is probably the correct way to draw the neckline.

sloping neckline...

 This would be the base TLT formed , a double bottom which looks like a large "W" and then it has a breakout which has stayed in a near perfect channel.

This is the breakout and channel. If you recall last week I put out a post on candlesticks and volume and the lost art of reading volume. You may recall that reversal candlestick patterns or specific candles with larger volume than the preceding day are often about two times more likely to be effective.

At the orange arrow above price we have an Evening Star (bearish reversal candlestick) and it is on large volume (see orange arrow above volume), which often denotes "churning" or the handing off of shares from strong hands to weak hands. 

Today (red arrow above price) "looks" like it may form a bearish confirmation or "engulfing" type of candle, it would be interesting if volume were to rise above Friday's as that would make the confirmation candle (today) a much more probable bearish reversal to the downside for TLT, thus the TLT short or TBT (UltraShort 20 year Treasury Bond Fund), the opposite of TLT with 2x leverage, which is a current open long trading position.

As for 3C...

 This is the daily 3C chart for TLT, you can see a negative in the region of the H&S top and a positive in the area of the double bottom on the $102 area, which is where I'd like to look at buying TLT for a longer term trending position so long as the charts hold up.

The current daily divergence is a weaker relative negative suggesting a pullback, but not the destruction of the larger positive divegrence.

Here's a closer look at the daily TLT chart. I expect TLT to fall out of the channel and as it does so, volume and momentum should pick up as support of the channel is broken.

 This is the (still VERY strong) 4 hour TLT chart, also showing a positive leading divergence at the double bottom area and a relative negative divegrence currently, again suggesting a move back down toward the $102 area.

 The 15 min chart has an even sharper leading negative TLT divegrence, thus it looks like it's ready for a move on a trading basis, either short TLT or long TBT (UltraShort of TLT).

 Intraday the 5 min chart has gone negative, but you can probably see part of the reason why I was saying to hold off on a TLT short last week.

On an intraday basis working toward the 5-15 min charts., this intraday 1 min is leading negative, again you can see why I was saying, "I'd wait" last week for a TLT short or TBT long, but now it is clearly deteriorating and the shorter timing charts are falling in to line.

 The 3 min chart also going negative for a downside move.

And again the 5 min chart.

The only chart I'm still looking for a turn around in is the 2 min chart, however, if the SPY/Market does indeed pull back and create a "W" base (Friday and today), then this 2 min chart looks right and should see TLT offer up a short entry around the $114+ area, a better entry and less risk.

 2 min chart.

This was the SPY capture at the time I captured these charts just before the last post today, Quick Market Update.

Here's the SPY now...

 The SPY intraday divergence (negative) is deeper and as you see price is moving lower, which means TLT is moving higher, closer to that $114-ish area that I think will provide an interesting TLT short entry or...

A TBT long new position or add-to around the price of $60.50 or so, which would give a better entry, less risk and still a very strong positive divegrence such as this 5 min leading positive.

I don't know if we'll make it all the way to TLT $114+, but I'd set some price alerts, a move above $114.25 and I'd be considering a TLT Put position if you want a little extra leverage or of course the 2x leveraged TBT would work if you prefer not to trade options.