Combining GB with spread trend

A place to talk about speculative investing ideas for the optional Variable Portfolio

Moderator: Global Moderator

User avatar
Vil
Executive Member
Executive Member
Posts: 255
Joined: Wed Jan 01, 2020 10:16 am

Re: Combining GB with spread trend

Post by Vil » Wed May 06, 2020 12:02 pm

pmward wrote:
Wed May 06, 2020 10:27 am
I did get stopped out on my VP TLT position
Was that on crossing SMA50 or the support mid April ? Know that's not lead by tech indicatos, but end of April/begin of May there was a small interesting divergence between the price and MFI(14). Looking forward your bond review :o

Miners got kicked slightly today, it seems.
User avatar
Vil
Executive Member
Executive Member
Posts: 255
Joined: Wed Jan 01, 2020 10:16 am

Re: Combining GB with spread trend

Post by Vil » Wed May 06, 2020 12:07 pm

pmward wrote:
Tue May 05, 2020 6:56 pm
Today's chart of the day. Something that caught my eye that I find kind of interesting. Since the bottom on March 23, mid-caps have actually been the best performing cap tier.
This graphic reminded me on one 'strategy' I read about couple of years ago (in a book with the same name as far as I can recall) - the 12% solution (claiming that's the average annual gain). Its 60/40 - equity/bonds with monthly rebalance. Equity part is chosen in between QQQ, SPY, MDY, IWM for the past 64 days - whichever is on top - that's the one to hold next month. If none goes above 0% - goes to cash. The same is done for the 40% bonds part - choice was between TLT and JNK ... ;D
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 06, 2020 12:34 pm

Ok bond market analysis. First, lets start off here with the TLT weekly chart. A couple things to notice. First is that ever since that initial rally from the March lows we have been range bound, but today we just broke below that range and set a lower low. If we close below 163.27 that is a point for the bears. Second thing to notice is that neat trend channel we held all through last year prior to the melt-up. It's possible that if bonds do have a big pull-back here, that we just go back into that past channel and continue grinding back higher. This is the third time we've broken above that up-trend, and the first two both failed and fell back in. Now we are way above upward sloping 20, 40, and 150 week moving averages. This is a point for the bulls. Under normal market conditions the price periodically goes back to check-in with the moving averages. That 20 week moving average at 153 would be the first "check-in". Lastly, momentum and relative strength are obviously fading. BUT, we had a massive rally off the lows in march. After a massive rally seeing declining momentum and relative strength is not always a bad sign. The rally was so strong that it is hard to keep up from a relative perspective. So on the whole, the weekly chart is mixed.

sc-8.png
sc-8.png (219.43 KiB) Viewed 2300 times

Next we will take a look at the daily chart. What stand out most to me here? The 50 day moving average and the 38% Fib retracement are both being tested today. Currently we are below the 50 day SMA, but above the 38% Fib. This could be a perfect bounce point. If we close below both of those and below the last low of 163.27 that could open up the trap door. So what are the next support levels below that? 160 is an important level. We also have that 50% Fib retracement about $153. What else stands out to me here though? Look overhead. See those to massive gaps from today and yesterday? The market doesn't like to leave gaps like that unfilled. It's going to be difficult to really open up the trap door until we at least close those gaps (though not impossible). Also, $170 has been very strong resistance. Once again momentum and relative strength are fading, but after the massive rally that would be expected. So as of the moment, this chart is mixed as well.

sc-9.png
sc-9.png (155.38 KiB) Viewed 2300 times

Next we will look at the 30 year yield. Notice how we were in a wedge formation, that broke out to the upside. Notice also how we busted above the 50 day SMA. This is a big point for the bears and something you cannot see in the TLT chart. You can also look back in April though, we tested the 50 day SMA and fell back down. So is this a repeat of March and a killer buying opportunity? Or is this the start of a leg up in yields? And if it is a leg up in yields, is it a retracement before going lower again, or is it the start of a new up trend? Only time will tell. However, of note is that RSI still has not gotten above 60. Usually 60 RSI is viewed as the cap for bear market rallies. So I would really want to see RSI above 60 in order to really give full credit to the yield rally. These are all simply puzzle pieces on the table at the moment.

sc-10.png
sc-10.png (46.79 KiB) Viewed 2300 times

Lastly, let's take a look at IEI, as this chart looks much different. Notice how we really have went nowhere in weeks. We've just been pinned between 133 and about 133.25. To me, this chart is an interesting divergence, as this is a bull flag right here. You can clearly see the flag pole up and the flag just going sideways. The longer price knocks on resistance like that, the weaker the resistance level is. It slowly chips away at it. This chart, unlike TLT, to me looks extremely bullish. Also, even with price going nowhere, look at that RSI? It's still above 50. This chart looks super strong to me. So, is this hinting at a new bond rally? Or is this simply a laggard that will eventually get dragged down? Time will tell. These are all simply puzzle pieces on the table. You have to look at all the evidence as a whole, look from both sides, and make your own decision.

sc-11.png
sc-11.png (43.82 KiB) Viewed 2300 times
Last edited by pmward on Wed May 06, 2020 12:46 pm, edited 2 times in total.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 06, 2020 12:38 pm

Vil wrote:
Wed May 06, 2020 12:02 pm
pmward wrote:
Wed May 06, 2020 10:27 am
I did get stopped out on my VP TLT position
Was that on crossing SMA50 or the support mid April ? Know that's not lead by tech indicatos, but end of April/begin of May there was a small interesting divergence between the price and MFI(14). Looking forward your bond review :o

Miners got kicked slightly today, it seems.
Yes I set my stop this last weekend actually just below the 50 day SMA. I didn't think we would hit it this soon. I figured the 50 day SMA would increase and widen from my stop a bit.
Vil wrote:
Wed May 06, 2020 12:07 pm
pmward wrote:
Tue May 05, 2020 6:56 pm
Today's chart of the day. Something that caught my eye that I find kind of interesting. Since the bottom on March 23, mid-caps have actually been the best performing cap tier.
This graphic reminded me on one 'strategy' I read about couple of years ago (in a book with the same name as far as I can recall) - the 12% solution (claiming that's the average annual gain). Its 60/40 - equity/bonds with monthly rebalance. Equity part is chosen in between QQQ, SPY, MDY, IWM for the past 64 days - whichever is on top - that's the one to hold next month. If none goes above 0% - goes to cash. The same is done for the 40% bonds part - choice was between TLT and JNK ... ;D
Yes, Ocho uses strategies like this as well. I don't trade just off of these charts, but I do use these as clues to where I want to tilt. This is kind of where I start, then from there I look at spread charts, and the relative strength of those spread charts to help me drill deeper. I also go beyond just those ETF's, I look at a plethora of individual countries, market cap segments, sectors, factors, geographical regions, etc and look for long term and sustainable trends in relative strength.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 06, 2020 3:09 pm

And TLT closed at 163.45 with a bullish looking hammer candle, above the last low of 163.27, the 50 day SMA, and the 38% Fib level. That is a big fumble for the bears. The failure of them to close us below any of those important support levels completely overshadows the fact that bonds had a 1.5% down day. It currently looks like the market wants to go back up and at least close those two gaps instead of "opening up the trapdoor" right now. Anything could happen though. We will have to see. It's certainly possible that I got shook out prior to the next rip to the upside. Probably should have put my stop below the 38% Fib level, in hindsight that would have allowed me to see one more card before folding. Hindsight is always 20/20 though. Long bonds are a tricky puzzle to figure out at the moment. We will have to wait to see what clues the market gives us tomorrow. The bears gave it all they could today and they failed miserably.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 07, 2020 9:03 am

Today's chart of the day SLV. SLV is currently above it's 50 day SMA for the first time since 27 Feb. More importantly, it's been struggling to get above it since 14 Apr. You can see it's basically been pinned down by the 50 day SMA and slowly following it down. But today, in the blue circle, we are above it. We are also just below the 20 day SMA. If we can close above both, this could be the launching pad for the next leg up in SLV. Also, on the 4 hour, 2 hour, 1 hour, and 15 minute charts we are also breaking above important moving averages today, but the higher timeframe always takes precedence which is why I chose to show the 1 day chart here over the others.

If you're looking to take a stab, the next overhead resistance is $14.80 followed by that wide gap from $15-15.64. On the south side we have support at $13.55 and very strong support at the gap from the island reversal between $12.31 and $12.87.

sc-8.png
sc-8.png (155.88 KiB) Viewed 2245 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 07, 2020 12:48 pm

BOOM SLV and GDX both doing the deal!

Also of note, remember how I said last night that the bears failed in dragging TLT down and that it meant that the bulls were going to try to close the open gaps? What happened today? Gap 1 closed. Gap 2 is still open. $167.16 is the number it has to get to in order to close that gap. What I am currently seeing on the 15 minute chart looks like the beginnings of a bull flag, basing to try to make a run at that $167.16 gap in the coming hours/days. How TLT handles that $167.16 resistance level will be telling.

EDIT: Now that a little time has gone by the bull flag on the TLT 15 min chart is definitely in play. That's a textbook bull flag if I've ever seen one. It's definitely bracing for a run at that $167.16, which is really the gateway to retest that stubborn $170 resistance level.
sc-3.png
sc-3.png (124.23 KiB) Viewed 2217 times
User avatar
buddtholomew
Executive Member
Executive Member
Posts: 2274
Joined: Fri May 21, 2010 4:16 pm

Re: Combining GB with spread trend

Post by buddtholomew » Thu May 07, 2020 3:20 pm

Out of GDX at 35.20 at least for today.
Nice to see LTT’s rebound and surprised to see stocks rally before tomorrow’s unemployment.
Still leaning towards a slow melt up with everyone in the media expecting a pull-back and/or retest of the lows.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 07, 2020 4:04 pm

buddtholomew wrote:
Thu May 07, 2020 3:20 pm
Out of GDX at 35.20 at least for today.
Nice to see LTT’s rebound and surprised to see stocks rally before tomorrow’s unemployment.
Still leaning towards a slow melt up with everyone in the media expecting a pull-back and/or retest of the lows.
The market has bad news fatigue, so I am not surprised to see stocks rally before tomorrow's unemployment. I mean, they've pretty much ignored all unemployment data thus far. And I also agree with you that the market won't go down as long as everyone is expecting it to crater. *If* it is going to go back down again it will want to rope all the bears and retail investors back into the long side just in time to sweep the rug out from under them. I think a rally to about ~3150 by the end of the month would likely be enough to do the trick. Then in June starting another leg down. Not saying this is what is going to happen, but it's a possibility I see on the table and am prepared for.

The other option on the table is that the market just diverges from the economy and melts up anyways... which lays the kindling for a bigger implosion later. If you go back a page or two here you will see I posted a monthly chart of the S&P showing it's megaphone pattern going back to Jan 2018, and this scenario would basically be continuing on that volatile megaphone pattern going forward with these massive quick volatile swings up and down every year or two, yet over the long term not really going anywhere. I mean we have went nowhere since Jan 2018 already, there's nothing that says we cannot keep doing this for another year, or two, or five.
User avatar
sophie
Executive Member
Executive Member
Posts: 4465
Joined: Mon Apr 23, 2012 7:15 pm

Re: Combining GB with spread trend

Post by sophie » Thu May 07, 2020 5:32 pm

pmward wrote:
Thu May 07, 2020 4:04 pm
The market has bad news fatigue, so I am not surprised to see stocks rally before tomorrow's unemployment. I mean, they've pretty much ignored all unemployment data thus far.
The unemployment data hasn't been ignored. It's all been priced in. What matters is whether it will be worse or better than expectations. It's looking like unemployment claims are dropping earlier than expected, so that's interpreted as good news - despite the fact that the numbers are still horrific by any other measure.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 07, 2020 6:07 pm

sophie wrote:
Thu May 07, 2020 5:32 pm
pmward wrote:
Thu May 07, 2020 4:04 pm
The market has bad news fatigue, so I am not surprised to see stocks rally before tomorrow's unemployment. I mean, they've pretty much ignored all unemployment data thus far.
The unemployment data hasn't been ignored. It's all been priced in. What matters is whether it will be worse or better than expectations. It's looking like unemployment claims are dropping earlier than expected, so that's interpreted as good news - despite the fact that the numbers are still horrific by any other measure.
Yes, I was making a quick to the point statement about it. Obviously there's more to the response as markets are extremely complex in nature. But, so far all unemployment data news days but 1 I think(???) have all been up days in the market... some of them big up days too. Also, on these days, futures haven't generally moved around much after the announcement. They pretty much just continued to do the thing they were already doing before the number was announced. So it just goes to show that the stock market hasn't really been paying much attention to this. The bond market on the other hand might be. I mean TLT was about flat in pre-market, and it had a really big day today after the announcement. We will have to wait and see tomorrow if and how the market responds to the number.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Fri May 08, 2020 11:32 am

Today's chart of the day, SLV:GLD spread. This is the chart that is basically the performance you would get if you were long SLV and short GLD. This is a good way to look at the relative strength of one asset vs another. This is a 6 month daily chart. Worth keeping in mind is that this has been going down for many years now. What do we have here? Looks like a bull flag forming. That's an approximate measured move of what would happen if/when we break out above it. To me, I'm starting to get the feeling that SLV is starting to lead GLD. If this resolves to the upside, it would put in both a higher high and a higher low on the chart, for a brand new up trend. Also, I'm not a huge Elliot wave guy... but they do say that the third wave is the longest and strongest wave generally. So if this breaks, it would be a wave 3. Also of note, RSI is positive, setting a higher high, and increasing even though price has been in a sideways trend. This is a bullish divergence. So both ways of looking at the relative strength of SLV:GLD are looking promising.

sc-4.png
sc-4.png (47.92 KiB) Viewed 2159 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Sat May 09, 2020 9:32 am

Weekend watching, another great video from Ciovacco this week and worth watching specifically because it is a very different viewpoint from what you will hear everywhere else. It's always good to look at the tape from both sides: "It sounds crazy and irrational, but history says the low may be in and stocks could continue to rally": https://www.youtube.com/watch?v=YQvz_r73d2Q
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Mon May 11, 2020 12:08 pm

Today's chart of the day Russell 1000 growth vs value spread chart. If on Feb 19 the day of the market top someone went long R1K growth and short R1K value they would have made a 17.4% gain during a period that stocks as a whole took a beating. Value appears to be dead with no sign of life.

sc-6.png
sc-6.png (45.64 KiB) Viewed 2407 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 13, 2020 8:50 am

Today's chart of the day is the daily chart for GLD. Look on the right at how beautiful of a tight consolidation this is making. This is a textbook pennant formation. GLD is building energy for a big move. Pennant's can break out or down, but pennants with a straight line on one of the sides tends to break in the opposite direction of the flat line. I've heard people refer to the flat line as the "launching pad". So GLD is likely to break to the upside. If anyone has been sitting on their hands about buying gold, down towards the bottom of that flat line about $158 is a good place to put a GTC limit order followed by a stop order below the 50 day SMA about ~154. This is a very low risk high reward setup. Also, if we never get back down to 158 and it just runs, an alternate buying point would be as soon as we get a close above the top downward sloping line, with the same stop loss a bit below both the bottom line of the pennant AND the 50 day SMA.

sc-10.png
sc-10.png (42.93 KiB) Viewed 2376 times
User avatar
jhogue
Executive Member
Executive Member
Posts: 618
Joined: Wed Jun 28, 2017 10:47 am

Re: Combining GB with spread trend

Post by jhogue » Wed May 13, 2020 3:53 pm

I hope you and your charts are right.

I stopped "sitting on my hands" a couple of days ago and bought some AAAU in taxable with cash I had been holding for some time as part of a portfolio rebalance.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 13, 2020 4:01 pm

jhogue wrote:
Wed May 13, 2020 3:53 pm
I hope you and your charts are right.

I stopped "sitting on my hands" a couple of days ago and bought some AAAU in taxable with cash I had been holding for some time as part of a portfolio rebalance.
Obviously there are no guarantees, which is why I listed a recommended stop-loss price in case it breaks down. But from a probability standpoint, it's looking highly likely that gold gets another leg up from here. Now the timing is a bit tricky as it will be a few more weeks until that pennant formation comes to a point. Usually these formations break out prior to the point (it could break out tomorrow), but sometimes these consolidations wait until the very last moment to resolve, haha.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 14, 2020 10:06 am

Today's chart is what I like to call the most important chart in the world. This is the USD chart. Once again, just like the gold chart yesterday, look at how it is coiling up for a big move. Unlike gold however, this is in a triangle formation. Triangles are not biased to the up or the downside. They can break either way, so you really have to be patient and wait and see. Maybe a slight clue in the RSI though, if you you at the RSI at the bottom you will see since the first of May even though price has been in this tight range, it has been setting higher highs and higher lows on relative strength. Could this be a clue that the USD may actually break to the upside, even after all the stimulus??? Definitely a chart I find very and interesting and I'm keeping an eye on. The USD breaking out could rain on both stocks and precious metals parade.
sc-11.png
sc-11.png (44.38 KiB) Viewed 2328 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 14, 2020 12:35 pm

pmward wrote:
Wed May 13, 2020 4:01 pm
Usually these formations break out prior to the point (it could break out tomorrow)
Looks like that wound up to be the case. I certainly had no idea it would really happen "tomorrow", but it did. Nice volume on the breakout too, especially since we are still intraday. Next thing to watch is that resistance area overhead I highlighted. If we can break above that, then we will officially have another higher high and higher low in place.
sc-7.png
sc-7.png (181.87 KiB) Viewed 2326 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 14, 2020 12:54 pm

pmward wrote:
Thu May 07, 2020 12:48 pm
Also of note, remember how I said last night that the bears failed in dragging TLT down and that it meant that the bulls were going to try to close the open gaps? What happened today? Gap 1 closed. Gap 2 is still open. $167.16 is the number it has to get to in order to close that gap.
Also, see this comment from May 7. TLT has now closed that second gap. This is how trading with technical analysis works. These patterns like this happen over and over and over again. They are not 100%, but they happen often enough to turn a substantial profit if you know how to manage your money/risk. The money/risk management ironically is harder for most people to get down than learning technical analysis itself is.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Fri May 15, 2020 9:07 am

pmward wrote:
Fri May 08, 2020 11:32 am
Today's chart of the day, SLV:GLD spread. This is the chart that is basically the performance you would get if you were long SLV and short GLD. This is a good way to look at the relative strength of one asset vs another. This is a 6 month daily chart. Worth keeping in mind is that this has been going down for many years now. What do we have here? Looks like a bull flag forming. That's an approximate measured move of what would happen if/when we break out above it. To me, I'm starting to get the feeling that SLV is starting to lead GLD. If this resolves to the upside, it would put in both a higher high and a higher low on the chart, for a brand new up trend. Also, I'm not a huge Elliot wave guy... but they do say that the third wave is the longest and strongest wave generally. So if this breaks, it would be a wave 3. Also of note, RSI is positive, setting a higher high, and increasing even though price has been in a sideways trend. This is a bullish divergence. So both ways of looking at the relative strength of SLV:GLD are looking promising.
For today's chart of the day we are going to check back in with the SLV:GLD spread. See my above commentary on this chart from May 8. What do we have here? Remember that "bull flag" formation, where I drew the potential breakout? Look at how that is resolving. Funny how that works, huh? Also, note how this is now above its 50 day SMA and RSI is continuing to rip to the upside, and is now over 60 (for those that don't know 60 RSI is considered the ceiling in a bear market, so getting above 60 is a bull market confirmation). How you doin' SLV??? Now I officially get to bump my stop loss up in my SLV position to lock in more gains :)
sc-13.png
sc-13.png (47.16 KiB) Viewed 2287 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Mon May 18, 2020 3:56 pm

Today's chart of the day (probably unsurprisingly) is the S&P 500. We just set another closing higher high today. Although, you can probably already see the point of interest I've highlighted. You can see this resistance area here that we came right into, and then pulled back from. There is an open gap there from 5 March, as well as some points of contention in the Feb/March timeframe. But, more interestingly, is the 200 day SMA is also right here. It's funny how multiple forms of resistance like to congregate together like this, it happens all the time. 200 day SMA is one of those strong universal indicators that every institution has on their charts, and does trade off of, so it tends to act as strong support/resistance. The bulls scored a field goal today with the higher high, but the real prize, the touchdown, is to get above that 200 day SMA. It's not surprising that we did not get above it in the first shot. We came about 20 cents short of actually touching it today before the sellers came in. But, the longer the market lingers around a resistance level the weaker the level becomes. It slowly chips away at the wall. The easiest way to get above it would be to gap above it. I wouldn't be surprised to see the bulls try to gap above it at some point this week. It's much harder to trade through a strong resistance level like that intraday than it is to gap above it. If we can close the week above that 200 day SMA it would be really hard for me to formulate a bearish technical case for the S&P. The 200 day SMA is that important. Likewise, if we reject at it, it would really put some serious wind in the bears sails. This is *the* signal to watch this week.
sc-9.png
sc-9.png (132.84 KiB) Viewed 2223 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Tue May 19, 2020 1:45 pm

And in today's chart of the day we have QQQ. The Q's just closed the big open gap from 21 Feb. So far the high of the day is 229.77, exactly 2 cents above the gap. Another bullish signal. If they can close above this, the only resistance level left is the all-time highs. I find it very difficult to even consider a bearish stance when the Q's seem to be all but destined for a test of all-time highs in the very near future. Unlike the S&P, the Q's also have breached that important 60 RSI level which is another bull-market confirmation signal. We are also still far from being technically over-bought, so there is still plenty of gas left in the tank for another big leg up in the coming weeks (of course, I'm not saying this will 100% happen, but that it is possible).
sc-10.png
sc-10.png (147.53 KiB) Viewed 2024 times
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Wed May 20, 2020 12:43 pm

Today we will take another look in on TLT. An interesting thing to note, notice the pennant formation? Lots of these pennants have been in play lately, obviously gold and silver just broke out of pennants just like this with a flat bottom last week. TLT is showing the same pattern. Remember how I've said that a pennant with a flat bottom is a "launching pad". 80% of the time these pennants break out in the opposite direction to the flat line. So what does that mean here? TLT appears to be basing for a breakout. This is definitely something worth keeping on your watch list. I have an opinion (pure opinion here, not backed up by anything) that we will may see some stock market weakness in the June/July timeframe. This chart is currently hinting that is a possibility as well. Likely, if stocks start to see some volatility return TLT will break out of this pattern and make a run for all-time highs. Not saying this will happen, but it is something worth monitoring as TLT could potentially be preparing for a big move. I would recommend waiting for confirmation though before taking on a new position. And if you're in a speculative position currently, a stop loss would be good below that bottom flat line, like $160-161 to give it some space for a fake-out. Also, worth noting that while momentum has obviously been weak (duh, it's in a consolidation) RSI has held in bullish territory. It has not once dipped below 30.

sc-11.png
sc-11.png (161.76 KiB) Viewed 1972 times

Also, stop loss moved up again in SLV today, current stop is in the general vicinity of about $15. Guaranteeing more profits. I would like to see us get a pullback/retest of the 200 day SMA and bounce to confirm that as support, that would give me confidence to move my stop up even higher to just below the 200 day SMA. Trailing a stop is a bit more of an art than a science. In a volatile asset like SLV you have to give it some room, as I don't want to get shaken out during normal market volatility.
pmward
Executive Member
Executive Member
Posts: 1731
Joined: Thu Jan 24, 2019 4:39 pm

Re: Combining GB with spread trend

Post by pmward » Thu May 21, 2020 11:00 am

pmward wrote:
Wed May 20, 2020 12:43 pm
Also, stop loss moved up again in SLV today, current stop is in the general vicinity of about $15. Guaranteeing more profits. I would like to see us get a pullback/retest of the 200 day SMA and bounce to confirm that as support, that would give me confidence to move my stop up even higher to just below the 200 day SMA. Trailing a stop is a bit more of an art than a science. In a volatile asset like SLV you have to give it some room, as I don't want to get shaken out during normal market volatility.
Today we are going to check back in with SLV. See the quote above from yesterday. I sure did not expect this to happen the next day, lol. These volatile markets move so fast. But if you look we did just this. We went down just below the 200 day SMA, just enough to excite the bears, then the bulls issued them a pie in the face and ripped the price back above the 200 day SMA. Now it is still early in the day so we have to see if this holds of course. On the 15 minute chart though there is a bull flag forming, so it's looking possible we will get another up move. If we close above the 200 day SMA that would give me a lot more confidence. So, as a learning lesson here, when and where would I move my stop loss up? Passing the test does confirm it is support, and there are bulls watching and willing to buy whenever we dip below it. That's a good thing. But, SLV is also a volatile instrument so I do not want to put my stop loss too close to current price. So, what I would do is watch for the next higher high. If/when we get above 16.44 that would confirm a new higher high and higher low. At that time I would move my stop loss up to probably ~1% below the 200 day SMA (once again to account for volatility and another fake out break down like this morning). At that time I would also look at other support areas that would be in the area near the 200 day SMA, as having it below multiple support levels if possible is a good thing.

Also of note, I did add on to my SLV, GDX, and GLD positions this morning as all 3 tested support this morning. I've always been more of a breakout trader than a support bounce trader, I'm trying to expand my horizons a bit with a new technique that is a bit more fitting in the current market environment.

sc-12.png
sc-12.png (156.68 KiB) Viewed 2404 times
Post Reply