Tuesday, August 12, 2008

Getting Short the Long Bond via TBT

The TLT's (chart above) caught my eye recently as it looks like the recent double bottom failed to reach its implied target. This is as a negative divergence, and for me, a tell that just maybe the bulls have lost some of their enthusiasm for this vehicle. Don't get me wrong short term treasuries are the ultimate safe haven until they are not any more. But the long U.S. bond? A speculation, nothing more. We look to have a low risk entry point here to get short. I shall do thi via my preferred vehicle the Ultrashort 20yr. US treasury ticker TBT here at $68.25 with a stop at $67.29

AIG (chart above) looks very sick. The gap down last week is now open 3 days and is taken out those lows. Yes, I know AIG is a very big player, but doesn't history tell us that matters not a whit when perceptions and psychology change. This does not bode well for the financials and for the Dow index.

Good speculating to you all and never ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit of Powershare Agriculture ticker DBA @ $34.50 stop $32.79
Long 1 unit of XTO Energy ticker XTO @ $43.85 stop at $39.62
Long 1 unit Currencyshare SwissFranc ticker FXF @ $92.70 stop at $89.27
Long 1 unit SPDR Gold Trust ticker GLD @ $81.55 stop at $75.82
Long 1 unit ishares Silver Trust ticker SLV @ $14.60 stop at $13.28
Long 1 unit Ultrashort 20yr Treasury ticker TBT @ $68.35 stop at $67.29
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $131.54
Short 2 units FedEx ticker FDX @ $87.70 stop at $91.18
Short 1 unit of Lehman ticker LEH @ $19.65 stop at $20.76


steve said...

I get what you are thinking about the long bond, and in the longer run I agree. But don't you think that when this bear rally is over even the long bond will benefit from the run to safety.

Another way to play the same macro idea is SDP, which is registering the deterioration of dividend driven stocks.

Just a thought.

Harleydog said...


thx for reading and dropping me a note.

Yes long end could benefit, but safe harbor seeking money should, and I use that term loosely, end up in the short end. That being said, the chart formation on the TLT (bear flag)is driving my trade.

I have also heard that some are having trouble finding shares to borrow in the TLT to get short. That said I am keeping a tight stop just in case said safe money does get ideas and want the long end.

I take no comfort fading a trade, the long bond, that has and is making Gary Shilling mucho $$$$.


Harleydog said...


yes SDP would be a nice idea. for as you know in a bear market, all stocks go down.

thx much appreciated.