We are watching a capitulation of long dated bonds in real time. Today's huge gap down of -2% breaking last week's lows is actually perfectly in line with TLT seasonality for the past 16 years. This is no coincidence as the March 2009 - March 2010 sequence in bonds is very similar to the March 2020 - March 2021 sequence. The Q1 FOMC in the 3rd week is usually a catalyst to reverse the sentiment in bonds. This extra gap down near the statistical low for the *Entire Year* is a true gift. When bonds recover, expect a huge buy cycle back into beaten down tech/growth stocks.
A big clue today was Gold. It tracked 30Y bonds (ZB Futures) overnight down, but reversed hard with the Euro off supports. Normally, if TLT was down -2% at the USA open gold would be crushed, but it did the exact opposite. Something is off with long dated bonds and I feel this will be quickly resolved with the FOMC catalyst next week.
Join in this great trade!
TLT Seasonality for the previous 16 years - There are no coincidences!
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Watch this ending diagonal and wedge here on 30Y bonds. The US30Y finally hit the 200 Week MA today at the top before coming back down, and TLT finally hit the 200 Week MA today as well.
Powell is finally admitting that we should see inflation this summer, which is in total agreement with PMI running ahead of CPI by 6-8 months. Go back to 2009 in this picture and you will see an 8 month lag in CPI compared to PMI before the snap back.
I expect the same thing to repeat this summer (just like summer 2010).
30Y Yields hit 2.5% and old September 2019 support area. Year CAM S4 is the final support here before very bad things can happen.
Let's see if this ending diagonal holds on it.
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By contract 30Y Bond Futures. Final support here for awhile (TLT shows similar). First target would be a backtest of Year CAM S3 above and the gap fill once we rolled to the June bond contracts from the March at the end of February.
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Decent buying on 30Y bonds coming in this week on schedule post March FOMC week.
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Watching for a possible wave 2 formation here have this great V Bottom start. Look for a right shoulder retracement (wave 2).
Initial target will be the gap shown.
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Rare large TLT block today toward the USA close. Possibly big buyer adding to position started a few sessions ago on March 11.
Trade is going very well, we may reach the March 11 gap today that resulted in the first buy entry when the next day gapped down 2.00. The net trade is now about 4.00 in profit. Options are doing very well for June expiration.
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Would like to see this ending diagonal finish on 30Y bonds and tag the 200 Week MA from the bottom to complete the first MAJOR wave up. Good progress.
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I like what I am seeing
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We are potentially witnessing a large rotation out of DJI and into NDX and RUT. Bonds could be putting in the wave 2 bottom here with this large volatility. Huge hammers at bottoms are indicative of exhausted sellers.
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Huge amount of bond related ETF blocks today. In my opinion big funds are dumping anything that is long yields in preparation of a big move. Gold is skyrocketing with a Euro bottom at supports + bonds moving hard.
💲 Block level ($) ● Confirmed dark pool block 💔 % BELOW block level 💚 % ABOVE block level
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Lots and lots of TLT dark pool blocks this week. We are just under the 50 DMA. The next markup phase should be a big one for TLT and bonds.
We are getting massive prints on other symbols such as GOVT today as well, a whopping 9 million share block trade. Something big is happening.
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Holding 50 DMA still quite well. The major seasonal timing again is July - September with gold.
I also expect a massive move in gold and silver this summer VERY similar to July - September 2010.
The bond sequence from March 2009 - May 2010 is extremely similar to March 2020 - May 2021. Inflation expectations hit rock bottom last year and have stalled since. The 10-2 spread continues to drop.
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Added to TLT call options for SEP today.
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Next leg up after CPI tomorrow. I'm ready. Will be adding to September calls in the morning.
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The seasonal turns have been very accurate since March for TLT. The rule of thumb is... when seasonality is working, keep listening to it. Works till it doesn't.
If everything goes to plan the next big leg up starts now and extends through the summer with a major move in silver and gold to repeat something similar to 2010.
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Recent reddit video talking about the reverse repo market madness and forced treasury buying by big investment banks to offload their cash liabilities.
Recommend all watching, very clear explanation of what is happening.
Banks are still flush with cash! Reverse repos will continue as long as the FED does not raise rates.
Big move today on NFP unlike the last time. This is quite different. A large inverse head and shoulders is forming.
TLT has tracked 16 year seasonality remarkably well since the March FOMC bottom.
We go on.
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TLT continues to track with high correlation since the March bottom to 16 year (4 elections) seasonality. This part of the year is where it gets extremely interesting.
Watch the reverse repo video above from reddit if you haven't already (2 comments ago above).
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Huge amount of BND blocks are hitting the tape today. Getting some TIP as well. Bullish above.
We are above last weeks massive BND blocks, nice breakout today through the neckline. Next target the 200 DMA and then the FEB 26 gap above near 143.00.
FED statement today that they are "fine with the repo market". This is forced bond buying by the banks (commercial banks selling their paper dollars to the FED in exchange for treasuries to unload their account liabilities).
Another big gap up today to the May 7 premarket NFP high. Remember, from the seasonal charts shown above from now until late August is where the bulk of the gains for bonds happen.
The similarities of 2009 and 2020, 2010 and 2021 are remarkable after large deflationary events, followed by massive CPI inflation catchups, followed by bond purchases by banks flooded with QE cash. Same play book until end of August this year.
I expect silver and gold to repeat 2010 as well, with major major moves in silver especially, possibly to $40 by December.
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From a Year pivot perspective, TNX is showing the polar opposite of TLT, which is expected.
Potential big drop through the 100 DMA, the lower target would be the R3 circled to the left.
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Overnight reverse repo purchases (commercial banks buying treasuries for their bloated cash accounts) breaking $500 billion and surpassing the 2010s.
Major target hit today on this gap fill. What a run. Short end of the bond curve sold off hard yesterday on the FOMC, and long end is getting bid. This seems similar to Operation Twist in 2011, selling short maturity bonds to buy long maturity bonds.
Gold decimated on this.
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Major target hit today. What a move!
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30Y bonds now completing the same Y CAM S4 to S3 movement here. HUGE criteria of this trade met. Have taken over 50% profit at this point.
What a ride! Long end of the curve bid, short end sold.
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Large overnight top in ZB 30Y bonds blowoff at the resistance of the previous picture. I am nearly all out of this trade via ZB contracts and TLT calls.
Trade closed: target reached
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FEB 12 gap filled today, another huge gap up in TLT. Close the remainder of the trade with over 100% gain in SEP 143.00 calls.
Thanks for sharing your research, trade plan, and charts. It's been featured on Editors' Picks.
PropNotes
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great post
john_stuart
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Good work
jpmunozc90
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For the life of me I cannot understand how so many people comment "nice work" on this. This is obviously ignorant and dangerous. TLT (i.e. bonds) don't get "oversold". The track something palpable that are real interest rates. If interest rates keep going up, TLT will keep going down. And that's under control of the Fed at the moment. Please save your time AND money and don't listen to clowns and their "oversold" signals
mortdiggiddy
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@jpmunozc90 Seasonality timing with the FED reigns supreme. Let’s revisit this “clown” comment in 3 months. This is a trade backed by many factors.
jpmunozc90
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@mortdiggiddy, You will undoubtedly be right as in TLT will rise at some point in time, that's inevitable. The underlying reason is not "seasonality" or "oversold" conditions like you mention. It is inflation that already started months ago, investors protecting profits from inflated market and going to bonds, long only funds rebalancing to meet their allocation criteria, etc.
I'll reiterate this so it's clear. Claiming that TLT is "oversold" is an ignorant thing to say. Since TLT tracks interest rates, you're implying that interest rates are "overbought" which is stupid by itself. Sit on that and think about it.
People like you are just interested in vomiting buzz words and putting some fancy charts together to build a following so you can profit from either patreon, youtube, or whatever else is subscription based. That's just a fact. I apologize for bursting that bubble but you're "giving advice" with real people's money. This ain't a casino bruh!
@jpmunozc90 This is a long trade from March to September. You seem to know a lot about me and have a lot of emotions.
Everything can become oversold or overbought that can be speculated on.
This is a good long here for a rebound for a few months. Seasonality most definitely plays out, as it did all through 2020 for a variety of instruments despite world ending news. These statistical profiles find a way to be realized year after year despite the headlines. I don’t have to prove it.
I would consider dropping the anger attitude and watch. Again, simple long for 6 months. Drop the name calling and assumptions about people you don’t know.
Johnny_Rockets88
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@mortdiggiddy, I actually think you are underestimating the amount of shorts currently on the 10 year bond. downward pressure in 20+ year yield will cause a lowering in the yield curve which will cause a short squeeze on the 10 year which will exacerbate the move in the value of the 20+ year bond. rates will likely fall to zero within days and TLT will reach $200 by June. Short squeeze of the century. THis is how George Soros made all his money