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TLT: Another Great Set-up

The last time I identified a "great set up" it was in the Market Vectors Gold Miners (symbol: GDX). This was only a couple of days ago, and since that time, the GDX is up nearly 10%. Another great set up is brewing as well, and this time it is in the i-Shares Lehman 20 plus year Treasury Bond Fund (symbol: TLT).

Here is the set up. My bond model, which uses intermarket inputs, remains positive. This model has been positive since March 11, 2011. Within the context of positive fundamentals for higher bond prices, we have the following technical set up, which is best shown in the daily chart of TLT. See figure 1.

Figure 1. TLT/ daily
TLT Daily

The black and gold dots represent key pivot points, which are the best areas of support (buying) and resistance (selling). The most recent key pivot at 114.24 should have acted as support, but it did not. However, it is not unusual for prices to briefly trade below support levels -taking out the "weak hands" -- and then quickly reverse back through that old support level leaving the sellers on the sidelines. This is "typical" bull market action especially in those trends driven by positive fundamentals. Therefore, a daily close above 114.24 would be bullish. This is another low risk set up as I would not want to see TLT trading below the recent weekly lows (~113).


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