Thursday, November 12, 2015

U.S. T-Bills: People seem fearful, albeit possibly only in the short-term

Treasury ETF TLT has been showing a bullish descending triangle since mid-August. It's two peaks came when it either passed or touched the Keltner channel lines in August and September and it now appears that the third hit may break through. I am now issuing a speculative long/buy on TLT as strong sessions from the last five days have gotten some indicators (like RSI(5) pointing north like this has room to grow. A lower low has not yet been put in and it appears resistance has formed at the low of mid-September of $118.00 (creating the flat bottom of our triangle).  
Please be wary though as a gap needs to be filled from $119.50 to $120.50. This gap in all likelihood will be filled but gaps often signal a reversal point so I have drawn what the greater downward channel may look like if this turns south. 

With general fear in the market Treasuries are a natural place to go and especially now with a strengthening dollar, but for me to be really confident in the upward momentum of this speculative trade I would like to see it reach and pass the EMA(34). The point and figure chart only has this going to $121.00 on the 30 minute which is not very good from a medium-term perspective.
I am in favor of the second scenario occuring. I believe the gap will be filled and TLT will resume it's downward fall as the S&P is at a crucial and very strong resistance point around 2025 (only about 20 points away).