1970's cartoons rock!
It appears that Fred's spidey senses are tingling. A quick glance at the computer analysis reveals statistical concentration by ‘deep pockets’. Perhaps Fred is really Peter Parker?
US Treasury Bond 20YR+ (TLT) And US Treasury Bond Diffusion Index (DI)
Timing the bond short, however, will be a process rather than a singularity. This means timing the trade of the decade will test one’s skill, patience, and discipline. Fred's comments below support this view.
Ignore the headlines, follow the money, and use TA to time the entry. The first push into statistical concentration doesn’t necessary reflect the optimal entry point. Lack of conentration in Bond Diffusion Index and technical divergences within the trend suggest patience over action. The setup and action, nevertheless, warrants very close attention for those without spidey senses.
US Treasury Bond 20YR+ (TLT) And Bond Diffusion Index (DI)
Hi Eric,
Love the blog.
I got "skooled" recently with an option play on the idea to short the
long bond. I'll hedge it better and get out faster next time. I
agree with him that shorting the long bond can be lucrative if you can
get it to work. A retired trader told me a story of how they used to
front run central bank trades the run up to the '97 asian currency
crisis, but with shorting currencies rather than the bonds.
I couldn't help but notice Friday that the long bond went up, but
oddly enough TLT puts didn't go down (I was watching the Jun TLT 90
Put). I immediately thought to myself that "smart money was quietly
taking their positions", as you would probably say.
Thanks for opening my eyes as to how this thing really works. It
seems like whatever the press is trying to scare you out of, that
should generally be the place that you should go.
Cheers,
Fred
