Trade Idea (Swing+) TLT long via TBT Short

If you have been reading this week you probably know I suspect a strong 30 year bond rally, if you saw the last post, Leading Indicators- The Week's Biggest Developments then you know that I think bond action is one of the biggest developments of the week, more to the point, perhaps since shortly after the October rally got under way along with VIX futures which I'm a little more gun shy about trading them long unless I have an excellent entry.

In any case, if you didn't get through the last post yet, here's a recap, 30 year Treasury bond Futures... Remember, rate/yields move opposite bond prices and yields tend to pull market prices toward them like a magnet, thus higher bond prices means lower yields and lower yields tend to pressure the market lower.

 60 min chart of 30 year Treasury Futures...

TLT is the closest asset that's liquid, however doesn't have a great leveraged product, thus the TBT (2x inverse/short TLT) makes for an interesting way to leverage T:LT by shorting TBT, you essentially create a 2x long TLT (20+ year Treasury Bond Fund).

 TLT's 60 min chart

TLT's 10 min chart with the negative divegrence at the far left and green arrow being the October market lows in which the market rallied from. You can see TLT's inverse correlation to the market.

 TBT is the inverse of TLT, this 30 min chart shows the October lows at the green arrow and some small accumulation in TBT at those lows, it moves with the market, thus the leading negative divergence this week should be clear and confirms what we see in TLT.

 This too is TBT with a 10 min divegrence and a range, an area we most often see divergences as price action seems dull, but this is where underlying price action tends to be heaviest, which is why I always warn not to get caught flat-footed in a dull market.

I'm going to put in an order on the tracking portfolio for a half size of full position short TBT. The range bothers me and I would expect a head fake move above the range in TBT, below in TLT, I'll set price alerts and if that happens, I'll enter the rest of the order for a full size position at the head fake move to give me a better average entry and lower risk, but this is a planned phased in trade from the start, not averaging down a losing trade.


 TLT 3 min looks ready to go, but even shorter term...

The 2 min chart looks like a pullback in TLT, which could be the head fake move I'm thinking about around/below the range, could take place.

TBT's 2 min chart has a positive suggesting it's a chance if not probability, if I get the chance, I'll use it to my advantage, if not, I'll still have a decent trading size position.