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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (33278)	1/13/2009 4:03:38 AM
From: jayt	Respond to of 78702

Spekulatius - I'm playing in this field, and got filled at 40.40 today on TBT. Stop placed at 37.16. Target 47ish, but it's actually a moving target as it corresponds with the 50dma. Of course this average is converging with the 9 and 20dma, so there is a much larger move coming if it can tighten up in here and see the 9 cross through the 20 and 50dma. We'll need a close above 42.96 to really refresh the newly found upward move in this issue. Until then we may find ourselves caught in another panic to safety in Treasuries....get stopped out, and have to reassess. I will note though that the TLT is still below it's 9 and 20dma even with the up move today. If we can catch another few days of selling in Treasuries we could see the 9dma fall under the 20dma in TLT, and that would act as resistance and fuel further selling. Which would be most welcome for my TBT position, and further confirm that Treasuries have indeed topped out. We shall see. Note that the close of 40.32 was below the 9dma, but not by too much. Tomorrow will show if it was smart to initiate this one at these levels. I've chosen to pass on PST for now. The following was taken from a post I did for both of my blogs on 1/7/09. RGRDS - JT "TLT was a favorite short at the start of 2008 as it would move to the high 90s every time a meltdown occurred. Then we would rally mildly and it would fall to the lower end of it's trading range. Well, as most of you know we had a meltdown. Treasuries ripped to the upside as we had fund managers playing a game of diversifying mattresses. The November 20 panic low corresponded with a gap up in TLT stopping out many long time shorts such as Jim Rogers. Then we get a big equity sell off at the beginning of December 2008 causing TLT to gap up even higher. And then came the FOMC December 16th cut to the 0-.25% range. TLT gapped higher. Was it an exhaustion gap or a continuation gap? For Pete's sake was the Fed going to continue to jam treasuries even higher? That's what most of us were thinking, but then the note that changed the game.....yet again. The Fed will start buying 500b of MBS paper over the next two quarters. No doubt selling Treasuries to subsidize it's purchases. And voila`....the reversal begins. TBT which is the 2x inverse of TLT, or an Ultra short on 20yr Treasuries as it's name implies gets the nod. TBT starts to reverse back up through it's 9dma and makes a move on filling the gap down from Dec 17th. Then it makes a dash for the 20dma. All the while TLT reverses as the pair implies. Then Barron's finally gets involved in the act. "Get Out Now" they proclaim in an article that lays out this very thesis that so many traders have been eyeing. Short TLT, and get long TBT and PST. And Monday Jan 5th we felt the Barron's bounce. It's still early on in this reversal, but it bares taking a stab at these levels providing the 9 and 20dma provide support now for TBT and PST. If shorting TLT these should be used as areas to add to an existing position or create a new one. Keeping 120 or as high as 123 as a stop level. TBT could use a stop of 38-39 for new positions. PST could use a stop at 52 with an upside target of 59-62. Volume is still thin on PST as the 9dma has not crossed the 20dma in this issue either. I would rather use TBT because it has more volume and it's pattern is the mirror image of TLT ie: with all those gaps to get filled. My target for TBT is 49 with 54 being my top end target for now. (Could go higher, but since it's new there is no 200dma yet.) TLT target is 106 with my top end target being 96.....with the possibility of a return to 91." tickermonkeys.blogspot.com tcmllc.blogspot.com