I’ve treated this T-Bond proxy’s interminable dirge this year as a consolidation, but the chart shows the flip side of this assumption, with a minimum downside target at p=95.26. That’s appropriate, given the heaviness of this vehicle since April. The pivot is clear and compelling, so a decisive breach would be warning of much lower lows down the road. Regardless, we should plan on bottom-fishing aggressively if p is achieved. _______ UPDATE (Aug 3, 10:40 a.m.): TLT’s latest plunge has exceeded p=95.26 by 0.51 points so far, which is bearish, but we can still try bottom-fishing if we keep our expectations low. That would imply initiating a long position on any rally of 1.03 points from the current low, 94.75, but seeking only a one-level gain. Entry based on the 94.75 low would be at 95.78, but you should lower that number if the 94.75 low is exceeded to the downside. Plan on exiting your position exactly 1.03 points above the entry price. You can substitute options, buying them when the stock triggers an entry, but let me know in the chat room of your plans, since beating time decay will be extremely tricky here. _____ UPDATE (Aug 3, 9:42): The biggest rally of the day fell 32 cents shy of the $1.03 reversal needed to trigger the bull trade detailed above. With TLT freefalling, we can still use the same criterion for getting long against the trend: a $1.03 rally. That is what it will take to signal a possible reversal, and even then, there will be no guarantees how high.
TLT – Lehman Bond ETF (Last:94.88)
