Who’s your favorite James bond actor? For me, it’s a close three way tie between Sean Connery (of course!), Pierce Bronson, and Daniel Craig. Not sure who’d I’d have to say my favorite was or is – each has merit. This summer, we get to see a new Bond movie with Daniel Craig AND another movie (not Bond, but looks equally interesting) with Pierce Bronson. 2 outta 3 so far. Step up and do a movie, Sean! We need you to complete the set!
Anyhow, besides the new James bond movie comeback this summer, my good pal Brooke Thackray put out a newsletter suggesting that the US long bond may be putting on a summer show as well. Here is his report – a worthy read.
Brooke notes that the trade, if any, should be considered a short termed one. I concur. Take a look at the weekly chart of TLT below. That’s one big symmetrical triangle. Yes, it is breaking a neartermed trendline, but my target would be to the top of the bigger downtrend line. That neartermed trend breakout is suitable for neartermed traders, but not for me. Onside for the move are rising momentum and moneyflow, plus a neartermed comparative relative strength move against the S&P. In other words, there is neartermed momentum present that may give Brooke’s call a good chance of being correct.
Below is the daily chart. It is overbought—I didn’t bother circling RSI and stochastics, but you can see the lines are above the overbought points. As a daily chart, realize we could see it hover in the overbought zone for a while until the weekly overbought levels are reached.
Again, to Brooke’s point—that may occur over the summer, setting neartermed traders up for a nice little tradable pop.
Mid and long termed traders might want to avoid this trade. The large symmetrical triangle has been in place since 2016. It would take a good sized catalyst to move it out of the triangle. I’d wait for a breakout of the top line to confirm that potential. I’d also give it about a 50/50 chance of happening. And that’s probably optimistic. Meanwhile, short term traders: knock yourself out!
Keith on Bloomberg/BNN Televisions MarketCall Next Wed. June 6th at 12:00 noon
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