Why TBT Still Makes Sense

Below, I have outlined my argument for shorting bonds or buying TBT.  This is a revision from my earlier post made back on January 18.

This is an updated chart on the $IRX, or the 13 week treasury yields.  The price you see on the right represents the treasury yields when you move the decimal point one digit to the left.  It is currently trading at 1.3, which means the yield is actually .13%.....not 1.3% or 13%, but .13%.  In other words, it is nearly free to borrow money.  This is what has helped fuel the dollar carry trade.


TLT is the 20 year bond ETF.  For months, it traded into a nice downward sloping channel until it began consolidating sideways recently.  On several occasions, I had mentioned that I entered this trade early, but it is beginning to work out now.  Yes, it broke out above resistance, but it did so on low volume.  It finally pulled back hard on the 24th (yesterday) with the heavy volume I have been waiting for and is breaking below support today. 

The 30 year Futures contract broke out, and then faked out of its channel.  It has not broken support yet, but when it breaks ascending support dating back to last summer, there goes a great shorting opportunity.

I used TBT for the trade.  As low as the $VIX is trading, I would not be afraid to buy some TBT calls as well.  Again, notice yesterdays volume spike.

Shorting Semi-Conductors - SMH

Semi-Conductors will tank next.  The near term target would be 23.38 with the longer term target near 22.  This is the 50% Fib level, and is smack dab in the middle of the gap left back in July.

I am using the ultra short ETF SSG to short semiconductors.   You can see the correlations between the two charts.  I bought 500 shares at $20.51.   My near term target is $26.65, and the intermediate target is $33.

Baling on Commodities

I should be jumping for joy after a day which saw my portfolio jump in value nearly 4.5%.  You might not believe me if I told you that 4 of my 9 positions were down nearly 5%.  What saved my bacon was having positions shorting China and Financials that were up nearly 10%.  I am still holding my bond short and my biotech short which were down hard, but I am watching them closely.  I am dumping my commodity longs however.

DBC - The price action Tuesday was my signal to buy DYY.  Price action today tells me it is over already.

DYY - I am just trading what I am seeing

USO

DIG

XBI - Biotech Looks Strong

Biotech and health care stocks have been the strongest sectors the past year.  Of the 5 major etf's that trade in this space, one in particular stands out.

Several of the ETF's just broke out into new highs with heavy volume behind them.  These are set ups that traders make their bread and butter on.  XBI has out performed the other etf's in this sector now the last three months, and has broken into new highs.  Today, I purchased 175 shares at $57.39.

FAZtastic! Shorting Financials

Financial stocks appear to be breaking down to me.  The XLF is showing 6 touches on the bottom side of its consolidation, while only three touches along the top side.

FAZ is a triple inverse ETF for the financial sector.  It is retesting a support area which should make for a good entry point.  Any strong break with volume below this support area, or a strong break above resistance of the trendline on the XLF chart above would constitute areas to bale from this trade.  I bought 550 shares of FAZ at $18.54.

Shorting China - FXP

Maybe I have lost my mind since everybody I know is still saying China is where it is all at, but the charts just tell me bad things are in store there.

I shorted China by buying 1050 shares of FXP at $9.60.

Shorting Retail - SZK

The retail trade has leveled off, and is looking very toppy here.  This pattern is more of a modified head and shoulders pattern.  I suspect we won't see the RTH this high for a long time.  

To capitalize on retails demise, I purchased 235 shares of SZK at $42.66, which is the ultra inverse consumer goods ETF.