As 2014 begins, TBT (ProShares UltraShort 20+ Year Treasury Bond Fund) continues to look like an attractive trade to me. I wrote about this prospect in late November, citing the possibility of a head and shoulders top forming in the 10-year Treasury futures contract. The right shoulder of that formation has evolved since then.
This pattern has been forming since September 2011. Its size suggests that a breakdown, if it happened, could signal the reversal of the secular uptrend since 1981 that so many of us have been looking for over the past couple of years.
Due to how it’s constructed, TBT isn’t the best thing to hold for the long haul because it can start failing to meet its performance objective in time. Think about this as a position trade to move in and out of as the downtrend in Treasury prices progresses. Treasuries have a personality of experiencing bursts that follow through into fast trends from time to time. So the reward potential is considerable if you can time a trade well.
Good trading in 2014, everyone!
