May 16th, 2014
by Jeff Pierce, Zentrader
Back on Feb 28th I wrote an article on TLT outlining a short term bullish move in this back to $111-115 level (then it was trading at $108). Now that it's hit that target now what? Given that I'm overall bearish on the equity markets, or maybe a better way to put it is not bullish and rather uninterested in trading the long side right now, I"m bearish by default. It's also what my market timing signal is suggesting the way to position my portfolio so that plays into it.
But am I really bullish on bonds here...I would say no. I can see a few scenarios playing out if my bearish thesis on the general markets materializes. If we get a sell off in equities we could simply see a neutral/range bound market in TLT where it trades between $111-115 for awhile...maybe going up to $118. Or if things really get intense to the downside maybe this has one last attempt to break out and trades up to $125 and forms a massive double top. Either way I don't feel all that comfortable buying TLT for a trade-able move higher, but I wouldn't be surprised to see it trade higher - if that makes sense.
I feel that the best trade right now is short the major US indexes.
Editor's note: This article was written after the market closed on 14 May 2014. On 15 May TLT traded all the way up to an intraday high of 114.41 before closing at 113.86, up 0.8% on the day. So far the anticipated resistance has not shown itself and the trade up further to 118 or even all the way to equal the all-time high above 125 (summer of 2012) as suggested by the author is still potentially on the radar screen.