TLT / TBT Update

Right now in the trading portfolio we have an open TBT long position, that's an UltraShort 20+ year Treasury, the opposite of TLT.

Basically I have liked TLT as a longer term long position, but at an entry of around $102 which means it needs to pullback. Recent signals have shown a very high probability move in TLT to the downside (our pullback likely), thus the TBT long position as it moves opposite TLT.

However, VERY recently I have had some concerns about treasuries longer term which is fine, it doesn't change anything right now. If TLT pulls back toward its base around $102 and shows positive divergences (accumulation in to the pullback), then the TLT long term long position is still on the table and it can be picked up there on the cheap. If there is no accumulation in to the pullback, then my very recent concerns have validity and we can simply stick with TBT long or decide what to do at that point.

As pointed out earlier today in intraday market analysis, the intraday positive divergences in TLT were likely to put a roof on this morning's advance and as the market was following bond yields, so far that has been the case.

The reason for this update is two-fold, one if divergences were to keep moving in treasuries before the release of the minutes (as we know, the F_E_D has leaked them a day and a half in advance to Wall St. firms before via email) at 2 p.m., then we might have some evidence for a leak, although my gut feeling is that this is not a leak. 

Second, if you are interested in a TBT long, we may just get a little walk back and allow you to enter TBT at better prices with much lower risk. As far as TLT's longer term scenario, I'll cover it just so we can keep in mind what the trade set up would look like there and what we need to see, I'll cover the intraday as well.

 This is TLT within a channel. There is a distribution or churning bar at the yellow arrows just above the channel, since it's a 60 min chart it's not exactly what I'd call a channel buster, but it does appear the volume/price action was depicting churning at the recent highs.

The intraday signals (positive) that are starting to form in TLT "may" lead to a bounce and thus a better TBT entry for new or add-to positions, there's a slight chance it's a leak, but as I said I doubt that, however the most probable reason we are seeing some slight positives forming this morning would be some support in the form of a gap which price is sitting right in the middle of.

 This is TLT's long term 4 hour chart depicting the base as well as a negative divergence that gave me some hope that TLT would pullback to support, offering a long term (long) entry. This is also the scenario I'm a little concerned about , thus what 3C does on the pullback should tell us everything we need to know.

 TLT 60 min negative for a deeper pullback than just a typical correction (I'm thinking the $102 level).

The intermediate 15 min charts also negative, giving us a pretty decent entry signal for a TLT short or TBT long which is still an open position.

This is TLT's 1 min chart, positive this morning, the reason I suspected early strength would have a roof on it as bonds started to find support from the overnight selling.

The 2 min TLT intraday positive and these match the TBT intraday negatives, CONFIRMATION.

TBT 1 min negative

TBT 2 min negative. And just like earlier (this is why I'm doubting it's a leak, because it hasn't continued to accelerate the new divergence) the divergences stop around the 3 min chart.

This may offer us a chance at a pullback in TBT, especially if there's a knee jerk move on the release of the minutes. If there's a good opening, I'll post it as I think TBT is one of the few trades (right now) that has more than just a bounce inside the range, I think it has at least a sub-intermdiate swing move.