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Shorting U.S. Treasury Bonds Using TBT

Interest-Rates / US Bonds Dec 17, 2010 - 03:55 AM GMT

By: Guy_Lerner

Interest-Rates

Best Financial Markets Analysis ArticleI have been highlighting higher Treasury yields since October 15 (well before the heard), and I also mentioned on December 8 that the move higher in Treasury yields would "pick up steam". But every price move has its limits, and the Ultra Short Lehman 20+ Year Treasury (symbol: TBT) is no different.


Figure 1 is a daily chart of the TBT. Prices are at the upper end of a well defined trend channel, and they are hitting key pivot point resistance levels at 40.79. I would expect some consolidation at this area before prices move higher.

Figure 1. TBT/ daily

Why do I think yields continue higher? This can be seen in figure 2 another daily chart of the TBT. The inverted head and shoulders bottom is nicely seen, and the resolution of this pattern should result in a price move of approximately 7 TBT points above the neckline of the price pattern.

Figure 2. TBT/ daily

The measured move of 7 points plus the neckline value of 37 suggests that TBT should get to 44. This is consistent with weekly resistance levels, which are shown in figure 3.

Figure 3. TBT/ weekly

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By Guy Lerner

    http://thetechnicaltakedotcom.blogspot.com/

    Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

    © 2010 Copyright Guy Lerner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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