Moment of Truth

The moment of truth has come for 2 major $MACRO asset classes – the Long bond ($TLT) and Gold ($GLD). Both are showing setups that look pretty bearish to me. Now, just because the setup is bearish, it doesnt mean that it will pan out. It could very well reverse from here and move higher. However, if a bearish setup is there, and the risk/reward favors me, I rather be short than long. Having said that, here is how I see both charts.

The Charts

$TLT – iShares Barclays 20+ Year Treas Bond

As you see, TLT broke below the ~118 support level (upper green horizontal line) and now is consolidating tightly right below it. This is unlike last time where we had a very similar setup but held above it. We are actually still consolidating in between the range of that nasty engulfing candle from February 1. Expect some increased volatility when it breaks (either way).

(Note: The support and trend-lines are messy because they are fitted for the weekly chart, and not daily. But I left them up there in order to show the similarity in patterns).

TLT daily














$GLD – SPDR Gold Shares

Now for gold. Gold is testing a pretty important pivot level (weekly chart below), where it coincidentally broke out from back in 2012. GLD is showing this nice bearish descending triangle pattern. As I warned gold bulls back in October  a failure to break over the ~1780 $GC_F level would be a major cautionary foreshadowing of future possible weakness.

A break below this ~159 level should see a quick drop to the next major support level of ~150 (about the ~1500 level for gold futures), where it has held a few times since topping out back in the summer of 2011.

GLD weekly











(Disclosure: I am Long $DZZ from 4.50)


Tags: $GLD $GC_F $TLT $TBT $ZB_F $ZN_F 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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