Friday’s rally caught me by surprise. It had such power that I’m tempted to trust my lying eyes instead of questioning how Treasurys could rally so sharply with the Fed working hard to turn them into garbage. Be that as it may, the upthrust seems likely to reach the 107.10 midpoint pivot shown (see inset). That number is tied to a Hidden Pivot ‘D’ target at 115.32 that would represent a 25% rally from October’s 91.85 low. The midpoint pivot will offer the most challenging test bulls have faced since their failure to surpass the December high at 109.68 in February. _______ UPDATE (Mar 13, 10:`9 p.m.): Today’s seemingly ferocious rally turned gutless just shy of the daunting peak at 109.35 recorded on February 2. The subsequent relapse was sharp, presumably trapping many bulls badly. Let’s see how long it takes them to muster another charge. A pullback to x=102.99 would trigger an appealing ‘mechanical’ buy, stop 98.87. ______ UPDATE (Mar 14, 6:26 p.m.): A further decline touching x=102.99 would trigger a juicy bottom-fishing opportunity via a ‘mechanical’ bid. Let’s try it with options, bidding 0.28-0.31 for ten 14 April 114 calls, day order. If we buy ’em we’ll seek to spread them off on a rally to zero out risk. ______ UPDATE (Mar 15, 9:33 a.m.): TLT surged higher overnight, stranding our stingy bid. The trade recommendation can stand for today, but it is unlikely to fill.
TLT – Lehman Bond ETF (Last:106.60)
