On the heels of yesterday’s LONG TBT signal, today’s metrics (updated as of (9:30 am PST) show TLT and GLD essentially at a neutral, zero line situation. In real time both issues are down– GLD -2% and TLT -.5%. This correlated alignment is expected so there’s no surprise here as we wait for a divergence to set up and provide a trading opportunity. Given the 26 day excursion of this pair trade and the fact the trade went flat 6 days ago, we might likely forecast that a divergence will occur in the next 20 days. At the same time the markets are poised for a significant wild card move following Friday’s Jackson Hole meeting which will probably be felt on Monday’s open. Straddle’s, anyone? We’ll look at one such scenario tomorrow.
