Here’s the last word on iShares Barclays 20+ Yr Treasury (ARCA:TLT) vs. ProShares UltraShort 20+ Year Treasury (ARCA:TBT) (20 year treasuries vs its ultra inverse). Despite all the news dynamics and geopolitical uncertainties it turns out that once treasuries find a support resistance channel prices tend to behave in a rather predictable manner. This doesn’t mean we cast aside our money management stops…those stay in place….what it means is that once we identify these S/R cycles the odds for making money increase substantially.
Below are the daily charts for TLT and TBT.
TLT has a intraday range of about 1%, TBT, because its an ultra (x2) has a daily range of about 2%. (Just for reference SPY has a daily range of about 1.3%).
Following the 2 prices charts is the M3 setup…just 2 inputs.
Then the M3 pairs analysis of the TLT/TBT skew.
The red lines point to the zero line crosses that signaled the best odds for long TLT trades and/or short TBT trades.
So far the skew indicator has provided a good gauge of TLT momentum. Just keep in mind that some factor will inevitably break the cycle (more tapering?). When that time comes all bets are off until a new support/resistance channel is formed.
