TLT Update

If you entered the TLT Nov. $108 Puts yesterday around 2:15 when the idea was posted and when I said I'd be opening a position there, you're up in the double digits this morning. TBT longs should be doing decent as well.

I want to give you some updated idea of the target and where I might be looking at TLT long because as you know, the target zone has been $100-$102, but I have a feeling we're not going to make it back to that level unless the market bounce we are looking for, which price wise looks beautiful so far this week and today, is as strong as the base itself looks, the 3C signals in the base as I have been complaining all week are there, but some of the weakest all year.

 This trendline broke this morning giving pour puts from yesterday or TBT longs, a nice profit for 2 hours in to the position. You know the TLT trade is not just about the market's need for an engine via the SPY arbitrage, but the Treasury correlation recently changed overnight just like the Gold correlation changed overnight a couple of weeks ago (flipping from risk on to flight to safety in T's and Flight to Safety to Risk on in G- at least for a time, now that may be in the air again- I think the only way to be sure about gold is to come cleanly out of the SPX base).

In any case, that's a clean, clear violation of the trendline. While I don't prefer puts at this time tactically speaking (although they may still offer the best return- they no longer have that element of surprise and deep discount we got yesterday), TBT does work as it doesn't have the unique features built in to options premiums. We "may" get a pullback to fill this morning's gap and that would be the place to look, but I don't think it is necessary as it can always be done later.

 TLT 3 min 3C Negative divergence, there are some worse, but I never considered this to be strong distribution, I considered this to be rotational distribution.

 The 10-year Treasury Futures have a distinctly different character about them, the benchmark Treasury does not look to have the same future as the 20+ years Treasuries which you know I like as a longer term play in the right place. This is the 30 year future on a 30 min chart, note the negative 3C divergence, again, not large, more in the area of a rotational distribution than serious selling.

Here's the problem with the $100 to $102 long target.

On this chart stretching back to July, you can see the price pattern clearly right? Well I suspect that unless the market bounce is stronger than it appears for now. Maybe a short squeeze with SPY arbitrage (which a dropping TLT helps) and add an activated carry cross  and some "just right" news on the Congressional budget front gets us there, but in lieu of that, the obvious area is that of symmetry and that's in the yellow area to the left and implied price target to the right of the mid $104 level.

We'll see how 3C reacts to prices either falling or bouncing intraday within this move for hints.

For now though, I'd be looking to take TBT profits when TLT hits the mid $104 level unless the updates for TLT and 3C show something quite different and with the puts, it's all about the momentum so I'll of course let you know when the position is wrapped up.