Charts That Matter for Next Week

Hey There Income Hunters,


It felt a little bit calmer this week …


Although that might just be me, as I started a course on transcendental meditation!


And I’m already feeling nothing but pure bliss.


Well, not really, but my No. 1 mentor, Ray Dalio swears by it … so I figured why not give it a try?


We did nearly have another clean sweep higher across all sectors.


However, the 10% drop in Discovery (Ticker: DISCA) held back the communications sector as leftover holdings from Archego were sold …



I have some interesting ideas for next week, and on Monday I’ll be opening for Mark Sebastian’s first Monday session in the new and improved Volatility Edge. It really is an incredible package that could set your trading on fire in 2021. Ten of 10 recommend — and you have to be a member to attend on Monday. So check it out now!


Elsewhere, there is one market where volatility is actually turning up — and it may spread vol contagion to a few others areas.


iShares 25+ Maturity Treasury Bond ETF (Ticker :TLT)


Thursday was a wild day for TLT. Here’s why …

 

On Thursday,  the market received shockingly strong economic news. First, much lower initial unemployment claims. Then, much higher retail sales and import prices … =

 

So, it was a double dose of accelerating growth and accelerating inflation …


What did TLT do? It went straight up all day and then faded into the close.


See the 30-minute TLT chart from Thursday …



Now, the logical explanation is a major short covering rally …


The consensus trade in TLT has been sell, sell, sell. Readers know that I preach avoiding consensus trades because the market has such a herd mentality …  If everyone is leaning the same way, they are all likely to take a fall … 


Bloomberg graph courtesy of ZeroHedge


This graph above shows a record short in bonds for the Commodity Trading Association (CTA). They mostly deploy trend following systems to the markets. So, they must have hit their stop loss targets and all had to get out at the same time.


This sets us up for an interesting trade next week because we have a 20-year auction on Wednesday. The 20-year is a difficult auction to absorb because it is fairly new and it does not match up against natural benchmarks for institutional investors.


iShares Silver Trust ETF (Ticker:SLV) 


I am so ready for a “Hi-yo, Silver! Away!” run.


I know it’s coming, but I think we have one more push to higher bon interest rates — which will likely send gold and silver tumbling one more time.


May will be an interesting month of trading for silver and gold. On Wednesday I will be getting into much more details during Option Pit’s second Round Robin Mentoring Session. Be on the lookout for the details!


Check out the chart on Silver below. Vol was as low as I can remember about a week ago and it has finally shown a bit of life in the recent run up to the 50-day moving average. 


If silver can clear the 50-day and close above it for a couple of days we may see volume pick as investors jump on for a renewed upturn for both silver and gold.



Bring It Home


I hope you’all learned as much as I did this week about making money in a low-volatility environment. (If you didn’t, go watch Mark’s webinar on trading this new market IMMEDIATELY.)


I was looking at the term curve yesterday. That is one hell of a curve to roll down… 



I look forward to hearing a lot more from Mark next week and talking to you about the markets with you guys, as well.

Have a great weekend and as always…


Live and Trade With Passion My Friends,

Griff

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