BEST INDICATOR FOR TLT: When to build positionsWe have here a chart of a TLT with a comparison line of the ZN1!/ZB1!. What I have found is that when the ZN1!/ZB1! ratio hits a resistance level, TLT is also nearing it's bottom. I encourage you to look at the ZN1!/ZB1! separately. Recently, TLT has reversed with strength to the upside once these resistance levels are in range.
TLT trade ideas
TLT breaks supportI've been watching this zone for a while as very significant support. Could see an outsized move down. I'm unsure about the impact on stocks at this point. Many would say it is great news as it confirms money moving into stocks. I personally feel its a good sign as long as the move down is slow and controlled as we do not want to see a rapid rise in bond yields. See previous post.
Bond Meltup IncomingInterest rates are going to continue to move up to help drain the excess liquidity in the system. TGA will spend the last of its money in the form of a stimulus package, then we will see a great reversal on the dollar and interest rates, as cashflow continues to dry up, banks too scared to loan to each other (and therefore not make consumer and commercial loans), and money continues to move from consumerism to savings accounts. Put simply, illiquidity in the system, and raising interest rates will lead to a smackdown to near-zero again, maybe even negative, to prevent a major shock to the system.
Looking to buy more TLT dips this year. I think the meltup will begin with bank insolvency.
The Mother Of All Bets (MOAB)With the financial world turned upside down people are looking for vulnerabilities within the system. Let me direct your eyes to the long end of the bond curve. Stress is already apparent in the repo market and funds are beginning to unwinding left and right. If you look at cot data on the long end of the bond curve specifically the 30-year you will notice that shorts have piled in to the highest level they have in all of history. This virtuous cycle was created in the anticipation that the Fed would spark inflation. Spoiler alert they didn't. With the dollar beginning to reverse I feel now is the time to go long the long end and expect for financial conditions to tighten as the demand for cash spikes.