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Showing posts with label Bonds. Show all posts
Showing posts with label Bonds. Show all posts

Sunday, July 6, 2014

Elliott Wave Hedging (TBT)

At times there are various ways an Elliottician can count a number of corrections but its still part of a larger pattern.

A recent example was on TBT

I was looking at 2 ideas, the first idea was very bullish, the other idea was bullish but needed a bit more downside first before more upside.


You can see that we could count a 5 wave move on TBT from 59.57, looking at TLT we could count the same move only it was down instead of up.

So i was looking for a corrective pullback, corrections are difficult to count let alone trade, so you can only really target specific zones.

"A small pullback here can setup for a move higher, although i can see the potential for a minor new low towards 61.00 for an alt idea in blue
So i can only suggest you hedge the ideas and buy a dip for the idea in black but add if a dip to 61.00, put your stops at 59.57

That way you are covered for both ideas"

I wrote the above with the chart on 20th June.

But we knew that the idea was wrong below 59.57 so members were advised to buy dips at 62.50 and if it dipped lower, buy and add at 61.00

By splitting the position in 2 parts it allowed us to "Elliott Wave  hedge" ideas.

As long as the stop was at 59.57 members knew where the risk point was.

You can see it did actually push under 61.00 but in the context of the prior 5 wave move from 59.57 it was still valid as a correction and pullback against that move.

Elliott Wave hedging is very common amongst good Elliotticians as long as you understand the context of the pattern its a very valuable tool.

Above 60.45 we remain bullish TBT, so rates are set to move to the upside.


Now being bullish is fine, but any good Elliottician will also be fully aware that this could actually be a simple 3 wave ABC bounce from 59.57 as shown.

If the market struggles to move much above 65.00, it could suggest some weakness, if it reverses and pukes hard back under 61.50 i would say that's a big warning for the bulls on TBT.

Friday, August 16, 2013

Elliott Wave Analysis of ZB (30 year bond)

After hitting my long awaited target, the reversal we have seen over the past 12 months strongly suggests a multi-decade top is now in for bonds.

Looking at the internal structure of bonds, i suspect its close to a decent bounce, so those that are short bonds (or long TBT) probably want to move your stops lower, as a decent bounce for wave 4 of [3] can see 137, that's a nasty move if you get short the lows.

Getting short near the lows is a dangerous method, as most times it tends to reverse and squeeze the bears that are late to the party.

In order to change the complexion of the decline, the bulls would need a move above 142, any bounce that stays below 137.50 (especially if a weak looking corrective advance) is a sell.

Long term it sure looks like a major high in place, so target the 100.00 area.

Sunday, July 7, 2013

Elliott Wave Analysis of ZB (30 YR US Bond)

Staying below 137 suggests the US 30YR bond has much more downside to go, and it appears that its finally topped a 30 yr cycle, although i have been monitoring this for the past couple of years


It seems the pickup to the downside of the past few months mirrors that of a 3rd wave.

I am sure the FED is watching this decline, but unless there some sort of devastating market crash in US stocks to force traders into safety, i think the FED is powerless to do anything about this. I think even that wont be enough, it looks like a secular change has now started and the FED is powerless to stop this move.

Sentiment is dictating price and it seems traders and investors appear to have had enough of US paper.

Will the FED be forced to sit and watch and let the market go into free fall?

Sunday, November 25, 2012

Elliott Wave Analysis of Bonds (30yr US paper)

The US Bond market has been in a bull market since the 1980s and although I originally was looking for a potential high early this year, we have not really progressed much further, expect that real rates have come down even lower and tested the prior December 2008 lows at 2.5%, potentially creating a double bottom.

No one knows for sure how low yields can go, but from a technical perspective, it sure looks a great setup for a reversal.
When you look closer there appears to be a wedge shape or what market technicians call a “bearish wedge”. We see these patterns at the top and bottom of a trend as the momentum slows down and the trend is in a transition and reversing the direction.

Having hit and exceeded my target, I suspect Bonds could see a bit more upside towards 153.50-154 based on the continuous contract.

Based on my Elliott Wave count from the 1981 low, I suspect this is actually inside wave 5 and near a terminal phase of this bull market, although we still don’t have any strong evidence to confirm the bull market is over, based on the wedge shape the odds still do look good for a reversal close by.

Close by in this market means weeks and months, as I think traders forget this is a 30 year span, not a 15 min chart, so a transition from topping to reversing lower is an ongoing event and will take months, but the fact that it clearly is showing a bearish looking wedge is a positive sign for the bears, but I think it will require a bit more patience for what arguably will be the “trade of the decade”.


Tuesday, July 24, 2012

Elliott Wave Analysis of TBT (Proshares Ultrashort)

In my weekend article i wrote about my concerns of a market that is very confused and we have 2 sides fighting each other for control.

On one side we have a potential reversal setup in the US aka DX and the US 30year bonds.

Yet since June 21st we have seen a bid come into the market and push up risk markets such as the ES and AUDUSD.

So we have to ask ourselves who is right?

The issue the bears in risk need to be concerned about is the US$ and its ramifications in the overall risk on/off trade, as if $$ moves away from safety, where does it go?

If the EURUSD is ending its cycle from the Feb 2012 highs and a 5 wave decline, then logically one one think that the move moves into assets that look cheap.

At this present stage, The markets that stand out are Gold and Silver, as value wise, i think i would would rather buy a market(s) that are near the lows, than to buy a market(s) that has travelled a large way since the June lows such as the ES and AUDUSD markets.

The question still needs to be answered, if we are seeing a cycle end where does the $$ go?

Looking at the TBT ETF, there is a strong case for a 5 wave decline ending or very near to a terminal point, and seeing how it closely tracks the EURUSD, (which it should as the EURUSD is basically opposite of the DX, EURUSD is 57% of the DX)

I still think traders on both sides of the aisle need to be vigilant here as we have a strange market.

But as we are seeing time and time again, when there is a safety flight bid, traders are running to the US$ and US bond market, but my work potentially suggests that cycles in both those markets could be signally a reversal.

Just how much lower can yields go on TYX? And how much lower does TBT go before a significant reversal?

One thing for sure is that when everyone is on one side of the boat, the market tends to reverse after a mature trend.

Based off my work, a mature trend appears to be ending on the EURUSD, DX, TBT and ZB.