Things have been a bit squirrely in bonds lately with noted market gurus variously calling TLT the “short of the century” or the “ultimate safe haven”. Although TLT has been resilient beyond most traders wildest imagination, the chickens (as the saying goes) may be coming home to roost. One way to get a handle on TLT directional opportunities utilizes our ole reliable Market Rewind Pair Model Analysis of TBT (the TLT 2x inverse) and XLF which seems to hit new lows each day as BAC looks more and more in store for the same fate as WAMU. The equity curve for this trade has been stellar and a quick glance at the current signal — long TBT, short XLF — still has a few days to run with an expected 9 day excursion.
