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As it stands right now, the market is in a bit of a consolidation zone, not sure if it wants to breakdown and finally reverse the trend or if this is just yet another pullback before another move higher. There have been many instances over the past few months of a pullback before another leg up, so you wouldn’t be totally wrong to expect this be the case.
However, it is wise to keep the possibility of a move larger than a pullback in the back of your mind. As buyers become more exhausted, the possibility of a larger pullback becomes a bit more likely. But, not until the trend totally breaks down should we be nervous.
iShares 20+ Year Treasury Bond ETF (TLT)
There has been one trade we have had on our radar for what must be months now and that is the breakdown of the TLT and the 99 level on the price chart. This break of this long-held support level comes at a time where the yield curve inversion is still in place.
The breakdown of this level implies lower prices could very well be in the future. Seeing as how price is currently trading below this level, a short postion could be put on with your stop at or above 99. If price were to reclaim that mark, you would simply exit the trade and start over looking for another.
Keep this trade on watch or if you want to enter, determine the amount you are willing to risk and be sure to stick to your risk management! That is the number one rule of trading, capital preservation.
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