10 Post-Parabola TLT Levels to Watch

Major retracement levels are in play for the red-hot TLT long-term bond fund

by Bernie Schaeffer

Published on Sep 17, 2019 at 7:12 AM
Updated on Sep 17, 2019 at 7:12 AM

As you may recall, it was an unusually bullish August for the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) -- even allowing for the exchange-traded fund's (ETF's) documented tendency toward positive summertime trading returns. The long-term U.S. Treasury tracker closed the month with a share price gain of 10.8%, marking TLT's strongest monthly performance in nearly eight years -- since September 2011, to be exact.

Of course, as with most parabolic price gains, the retreat in TLT shares has been even somewhat hastier than the advance. From its Aug. 28 all-time high close at $147.80, the bond ETF has backpedaled 7.6% in just 11 trading days, and on Friday closed south of its 50-day moving average for the first time since April. TLT's historical volatility (HV) readings certainly reflect the degree to which this six-week-plus roller-coaster ride has deviated from the fund's typical price momentum; as of this writing, Trade-Alert data noted a new 52-week high of 14.6% for TLT's 60-day HV.

Month-to-date flows data from etf.com suggest that bond bulls are seizing on the rapid-fire TLT retracement as a buying opportunity; so far in September, free-falling TLT has collected net inflows of $1.22 billion, nearly doubling the $642.71 million in net inflows garnered over the course of the big August breakout. And with TLT now having revisited most of the ground it covered on the way up the charts in August, the fund looks poised to meet back up with some significant technical levels in the days and weeks ahead -- some newly minted, and some well-established -- which should be of keen interest to those now dedicating fresh capital to the ETF:

  1. $143.60 = July 2016 closing high
  2. $138.82 = 50-day moving average
  3. $136.67 = 38.2% Fibonacci retracement of rally from March 1 year-to-date low close to Aug. 28 high close
  4. $136.51 = Aug. 2 pre-bull gap close
  5. $135.95 = 80-day moving average
  6. $134.40 = 20% return from November 2018 closing low
  7. $134.28 = 20-week moving average
  8. $134.12 = 38.2% Fibonacci retracement of rally from November 2018 52-week low to Aug. 28 high close
  9. $133.66 = 10% year-to-date return
  10. $133.02 = 10% correction from August closing high

tlt daily chart 0913


Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, September 15.


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