The daily chart (see inset) lacks sufficient power to push TLT significantly above the 105.49 target over the next 2–3 years. However, the tailspin that has followed mid-September’s 101.64 top is likely to end on or around the green line (x=91.88), where a ‘mechanical’ buy would be in effect. I’ll guarantee at least a one-level profit thence, although there can be no guarantees the decline will even reach the green line to fill your bid. The bigger picture is iffy but allows for a move to 116.43, the midpoint Hidden Pivot resistance of the long-term reverse pattern shown here. The rally to the green line has twice signed such a move, but the signal is weak, and a relapse to new depths is possible even if TLT reaches 105.49. Don’t cheer too loud for this, since it could only happen via a debt deflation that would turn real rates as low as 1%-2% into a crushing burden, as occurred during the Crash of 2007-08.
TLT – Lehman Bond ETF (Last:93.70)
