As the summer season comes to an end, 20+ Year Treasury Bond ($TLT) continues to climb higher. With well established higher lows and higher highs since the March of this year, we still believe that the Treasury Bond will do well until end of the year, and all the way to the next year. As we are still holding our heavily-positioned Calls (LEAPS) since the late March, we are getting ready to unload most of that positions possibly in the near/intermediate term.
We do believe that the Treasury Bond might see one more thrust to the upside before taking a sizable pullback/decline for the intermediate term. Our plan is to close most of our current positions when it gets to our next targeted area and wait for that pullback/decline. After that perceived sizable pullback, we would then need to wait for a confirmation of a bounce before initiating another heavy positions on it to hold next 4-6 months.
In this post, I want to share with you several charts including week-ending weekly and month-ending monthly charts so you can see, what we have been watching and why we were firm with our positions and the its direction. So far, we have been very content with it’s gain but we will be watching the Treasury Bond very closely next few weeks as we believe we may get another thrust to the upside.
As I have mentioned on my previous post that this is why technical analysis work, and why we prominently use technical analysis for our trading. When you are trading something like the Treasury Bond, only way to truly profit is to position trade (long term). And for anyone to hold positions over 6 months period of time, you must ascertain major bottoming signals and have unyielding faith on your analysis to hold (which is the hardest part in trading). Fortunately, that’s what we were able to do and continue to hold our positions here. I share this chart with so you can see how it played-out. And also you can see that 2011 March action was very similar to what happened here. Again, history may not repeat exactly the same way but it will repeat in a similar way.
On August 20th, we saw bit of pullback, but as I often say, “we don’t freak-out on pullbacks but rather, we embrace it, because after the pullback, higher move is coming”. We held the potential support level (see arrows) and continued higher thus creating higher lows in the intermediate term (meaning trend is bullish). Last few sessions, we did hold up (keeping the gap open) so even it pulls back, if we can able to hold above $117.60ish, we do believe that the intermediate trend will continue. What we are looking for is one more thrust to the upside to possibly $124ish area before the sizable pullback, but what we don’t know is, if its going to overshoot (moves higher than $124) or may not even reach the $124ish area. We would need to watch the price action next few weeks.
6 weeks has gone by since 7/17/14, we closed another week strong as you can see the fullness of the last candle. Looking at this weekly chart, $124 does seems like very doable doable.
That “3/23/14” chart was first discussed with our Club members showing the potential “major bottoming” signal while our indicator was confirming that with a “buy” signal (see red circle). Obviously, we can’t put our entire faith just looking at this one chart, and because of that, at that time, we were also looking at a potential major bottoming signals on the daily and weekly price actions as well. So last March, when we put all of our findings together, we concluded that this monthly chart could have been that last piece of puzzle to put all this together as a confirmation to conclude that the Treasury Bond is indeed bottoming.
After 5-6 months has gone by, you can see that how strong this monthly chart looks. In August, we had very strong month as the last candle examines. This monthly chart tells us that there are much more room to go to the upside in the primary term.
7-10 Year Treasury Bond
[$IEF Monthly Chart]
Long-term uptrend support held and sustained and we are moving higher as you can see in this monthly chart. Back in May, the uptrend held and it continue to hold today. It looks like we have so much more room to move looking at the 7-10 Treasury Bond ($IEF) monthly chart here. You can able to see how the bulls are really finding and gaining momentum here. Look at how much volume it picked up last 4 months, its incredible while the indicator is screaming to move higher.
Our Current Holdings
We have been very content with it’s move last 5-6 months. Again, we do believe that there will be one last thrust to the upside before a sizable pullback. We will be unloading most of our positions in the near/intermediate term (depending on it’s price action) and wait for that sizable pullback. Once the pullback occurs, we would have to wait for it to bounce and with a confirmation, we will be initiating another heavy positions on it to hold next 5-6 months going into the next year.
[$TLT Weekly Chart]
We think the Treasury Bond will continue to sustain this bullish primary-trend all the way to 2015 (obviously, its going to have its up and downs in the intermediate term but in the primary term, we believe it will continue), and ultimately, we are targeting the levels as I have annotated here using Fibonacci tool. We have plan to continue to play the Treasury Bond to the upside until end of the year, and if possible, all throughout the next year as well.