Yes The TLT Broke 98

I have not followed this relationship in the past. I had set an alert to 98 level on the TLT early June and was not excited for my current long positions when this level was broken higher, but where is TLT headed?

Given the price action of the past, I thought TLT would retest the range down to 90 as a target as the market ran higher. This did not happen even as some stocks have seemed to find support with the TLT breakout. Odd?

The first attempt to break 98 by TLT respected resistance closing below it on 7/29/11. Todays price action firmly broke that resistance, although that happened 11/30/10 as well.

Given the price action of today, I think TLT will retest the weekly downtrend line at approximately 101.00.

The weekly chart below shows what is expected to happen in TLT relative to prior major lows in SPY; A large TLT top followed by a sharp major SPY bottom.

Remaining in this frame of mind and realizing the previous statement would represent a future turning point, the market sentiment currently is then set for TLT to not top and SPY to not bottom within recent ranges.


However the relationship of this pair has been stretched with the increase in frequencey of TLT to stay within a range (88.00-98.00) and has allotted SPY “churning room” resulting in minor peaks in the TLT coming after or at SPY minor bottoms- even when breaking this range Ex; July 2010 daily.

In other words, although volitle, the TLT has been able to rally while the SPY carves out higher lows since April 2010 according to these charts.

Is the TLT going to break this resistance line? I will note that my own bias/sentiment for the TLT to break outside of this downtrend line on its first attempt in a spectacular demise of the stock market is limited- as of today.

The daily chart below is marked for the argument that the TLT will top at the weekly downtrend line at or after a SPY bottom has been made for another intermediate time frame move higher in the SPY.


I do not hold any TLT positions. I do not watch TV.

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  • With about 1.5hrs to go, the markets have pressed lower with conviction, much more than anticipated but some stocks have gone sideways. 

    As of now, SPX has not taken out 1258.07 low of 6/16/11 which we marked a 5wave elliott wave from. The correction of which could reach 100% as a possible wave 1.

    A break of this SPX level, which coincides with a HS neckline would assume much lower prices theoretically.

    I have a chart below that updates the TLT and the SPX with these trend lines at the weekly time frame to show how the above analysis has played out.

    As it stands currently, if SPX is to reverse from the anticipated high of 101 in the TLT, it appears that it would create a low AT the high of the TLT given the price action.

    Further, the DJT weekly chart was added to show it too is at a critical level with the SPX.

    Time will tell.

  • Didn’t take long for time to tell an alternate story to the one above and wipe out the obvious 1258.07 SPX low. 

    As well, the DJT SR lines mentioned in the charts below were jeopardized.

    With aggressive selling right into the close, the SPX, DJT and TLT did not bounce at the anticipated levels.

    SPX closed below neckline, DJT closed below horizontal SR and TLT closed above weekly resistance levels.

    As posted to StockTwits, “The reversal expected was not on cue.”

    Todays trading is certainly a major gut check if not positioned properly. 

    If selling continues in the SPX, TLT could run to 106  and 108 creating a larger channel.

    Regardless of what unfolds in the coming days, I will have to be cautious of rallies from this point, or lower, being sustainable just based on the awful close today.

    The relationship of SPY to TLT could be reverting to Major turning points rather than the Minor ones found within the accelerated frequency of the TLT range since April 2010.

  • Today the market continued to press lower. 

    My original theory that resistance would be found at the weekly trend line for TLT proved false again. 

    The TLT DID cut right through this trend line, and the “demise” of the stock market (as I put it) seems to be upon us. I don’t feel that way, but I acknowledge the carnage of the last two days as brutal.

    In turn yesterday’s outlook was warranted, and the TLT found itself pressing higher towards 106.

    Between todays highs and the 108 level the market will truly as if it is broken.

    Todays close could allow for the TLT (and the indices) to produce a capitualive move.

    I may note here if the TLT reaches the 108 level, but I will not likely continue to update this post for future moves. 

    The prior reversion trade and hypothesis has been proven false. 

    Major turning points/reference points in the relationship of TLT / SPY pair now must be considered.