Transcription
Hi, this is Kri Artech with Wicked Stocks, bringing you an update on the TLT. That is the iShares 20-year Treasury Bond ETF. TLT is probably the most actively traded treasury ETF out there. It's the long bond, so to speak, but in ETF form. It is inversely correlated to interest rates. Uh, so as interest rates rise, the TLT drops, and vice versa. And, um, you know, you can see how we've had these fluctuations. Once again, this is a weekly chart that goes back, um, some seven years. Um, and we are—what's worth noting here in this chart—still in the confines of a long-term bear market in the TLT. In other words, a long-term, uh, I don't want to use the word bull market in this, in in the interest rate, uh, markets, but we're in a long-term uptrend for the interest rates, uh, despite the fact that they've eased back, you know, since this low that was put out in October of '23. So about a year and a half ago, we've been in this sort of methodic rotational sequence. You know, yes, uh, interest rates will drop, and then interest rates will rise modestly, drop modestly, rise modestly, and we've been very quietly trading here for the last month and a half.
9590, dropping 34 cents a week, still are ceiling through through the year and able to contain buying pressures through the year and below which or once tested, we can fall back to horizontal channel support. As you recall this structure, we missed it by a hair, uh, back in January, 8445. And this is sort of an echo of what I've been saying now for the last few months, which is that once we test this horizontal channel bottom, and we did essentially test it, uh, we can ease into this very—we've got this wedge, right. Right, 8445 is uh, an 18-month, uh, wedge, 18-month channel bottom, four-year channel top. We can fill this out for the next few months, uh, but uh, as we continue in the later year, one of them is going to give. And, um, the likely outcome is to the downside still because of the strength of the four-year trend. Now, we could also close above 9590, and then we enter another dynamic altogether, but I'm not really going to go there in this video right now. Really, all the parameters are 9590 ceiling, dropping 34 cents uh, a week, and we've got an 8405 floor. I think this is rising about 3 cents a week. So this is the two-sided framework that we find ourselves in as we continue into even through the second quarter.
Now, if I were to continue moving forward, if you recall from the last video, I mentioned that if we were to close above this 3-4 month descending channel top that is at 8945 this week and after having closed above it, and I can zoom in here just a little bit so that you can see how, you know, after we closed above it, uh, the week of February 24th, it's been holding the lows pretty well since then. And yes, holding above 8945 will keep the 4-year channel top at 9590 still in reach, say between now and the end of April. Uh, but there is another element that I want to show on this chart, and that's really the purpose I'm bringing this to your attention, is because uh, we may have a sell signal anyway, even if we don't close below 8945. 8945 settlement below is sort of the final shooter drop on a retest then of the uh, 8445 uh, channel bottom. Uh, but until then, uh, we could continue higher to 9590. I do want to zoom in just a little bit and show you the 8945 descending channel top that's been holding the last few weeks. We also have this more recently formed, and this is like a 2-month, 2 and 1/2 month channel bottom, $8992. Um, and so I think if we close below 8992, if you're long the TLT, you may consider easing up on that uh, position, uh, because also we've got the low of the high of 8973. And this is really the point I want to make in this video. It's taken me a few minutes to get here, but sometimes you need to create the backdrop. Um, 8973, the low of the high, that is the highest that this uh, TLT has been since the January 25th low. The low of that high is 8973. In terms of just pure bar chart analysis without the line studies, closing below the low of a high on the weekly chart is a sign of an overbought market that is inclined to continue south. And if we close below 8992 today, let's say we close below both today, 8973 and the 8992 channel bottom, I do see that as an actionable sell signal, at the very least an actionable get out of your long position signal because I would no longer, at least anytime soon, anticipate uh, the 9590 longer-term channel top. And in fact, uh, you know, closing below 8973, the um, uh, 8973 level, I do see the 8445 as likely over the next couple of months, say, um, you know, by the end of May, probably sooner than that. This could be a 3 to 5 week break with present volatility. We've certainly seen that before, so this could be potentially by the end of April. If we were to close today, that is Friday, March 14th, below 8973, I think that is likely. So that is the short play if we close below 8973.
Now, if you prefer to wait for a settlement also below this descending channel top at 8945, I don't have a problem with that. Um, you know, that is the safer bet, uh, but just know I'm not crazy about uh, staying long or buying at 8945 if we close below 8973. I know I'm getting deep in the weeds here on these particulars. Let me just uh, leave you with this image, or this is the image I really sort of want to burn in your brain, which is to say closing below 8973, I see a good opportunity to play the short side in the TLT. Maybe you reach for 85 strike out-of-the-money puts that don't expire. I'd probably go, I don't know, four to six months out on this, uh, potentially 3 to 5 week play, but it could take the better part of two months. 8445 solid support, able to contain selling through the second quarter, and from here we can round back up to the 9590 formation within several months. Like I said, we could continue to fill this wedge out into mid-year before the market tips its hand in one direction or another. And as I say, because of the strength of the four-year bear trend in the TLT, odds favor a violation of 8445. A probability, it's not a strong one. We could just as easily, as I say, especially if we enter a recessionary environment, which is certainly possible later in the year, I would then anticipate a settlement above 9590 and a continued easing of interest rates. Um, but you know, if we continue to chug along despite the uh, tariffs, their inflationary impact, if inflation continues to pick up as we move, um, or picks up, I should say, as we move into later year, then just the opposite, we're likely to close below 8445. Those are the fundamental scenarios that I could see. I think this pretty much rounds it out. Uh, I think I have said enough. Uh, I'm going to leave you with this image. Closing below 8973, sell signal through April. Holding above this zone will keep holding above 8973 and an 8992 will, on the other hand, keep 9590 in reach over the next month or two. I'm going to leave it at that. Thanks for watching. I'll be back soon with another uh, Wicked Stocks video.