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.