TLT has dropped below the area the divergence was first spotted which is a 3C concept, no matter how long a divergence may go on (implying a more moderated average price), they almost always seem to surpass the area in which they were first sighted which was the case with TLT as well. In practical terms this means if you were to have shorted TLT on Aug 26th when the first divergences started forming, even though they weren't at a complete stage were we'd call for an intraday reversal, that short would be in the money right now which has some pretty ugly implications for a number of stocks and the market as a whole, but this is a concept I've known about and seen for years using 3c.
As for TLT which has been updated a couple of times the last few days, it looks like it has found some support and a possible area to push higher from after a constructive pullback, the only thing I'd say it needs is a little more time to widen out the basing area, otherwise I think it's moving higher. As to the reasons why, there are a number of possibilities covered in the original post linked above.
This looks like a constructive pullback, the type I want to buy as it's at a discount and lower risk.
I'm a little more interested in the implications on rates.
No comments:
Post a Comment