etfmsolutions: Poaching the Bond Cycle.....3.25.14

Tuesday, March 25, 2014

Poaching the Bond Cycle.....3.25.14

Here's the last word on TLT vs. 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.

Commentary and Updates

Mosaic Solutions commentary is typically published daily as time permits and market action warrants.
Posts feature Mosaic model updates including delta neutral stops, VIXEN directional trades and PONZO forecasts.

NOTE: Posted risk exposure indicators, signals and metrics apply to Mosaic models only. They are not directly correlated with price movement in the major market indices and can not be used to forecast directional changes in those instruments.
Each Mosaic model is a unique blend of risk factors and must be treated accordingly.

TRENDX is a proprietary Mosaic market signal that blends volume, RSI, momentum and rate of change.

ETF Mosaic Solutions and the editors of Mosaic Solutions are neither an investment advisory service nor registered investment advisers or broker-dealers and do not purport to tell or suggest which securities or currencies readers should buy or sell for themselves.
This site and related software products are for research and educational purposes only, and nothing herein should be construed as an offer to buy or sell, or as a solicitation of an offer to buy or sell securities, or to provide individual investment advice.

Investing is risky and past performance, whether actual or tested, is no guarantee of future results.
Any quantitatively derived allocations referenced herein should only be starting points for conducting your own research.

You are responsible for your own trading decisions and resultant gains or losses. When in doubt, please seek professional guidance from a registered adviser who can respond to your personal needs and risk profile.