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My blog (http://thehonesttrader.blogspot.com/) is set up based on the following premise: There is so much nonsense spouted by investment pundits everyday that is so poor it makes me ill. Not only is most of the advice poor, but the majority of the time these people take no firm positions, know... More
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  • Rationale for the TBT (2x Ultrashort Long Term Treasuries) Swing Long 0 comments
    Jun 28, 2009 12:07 PM | about stocks: TBT, TLT

    I mentioned Friday I took a swing long in TBT (2x Ultrashort Long Term Treasuries). The rationale for this is for several reasons. If you read the blog you know I think yields are going to rise (taking bond prices down) on Treasuries due to ongoing supply of Treasuries as we keep issuing debt to fund "everything", inflation concerns, dollar concerns, etc. However, that is all longer term stuff and I already have a longer term short position in the TLT (long term US treasuries). So why did I add a swing leverage short to my book? Well, Treasuries have surged in recent days and look overbought and right at the 50 DMA (also hitting the downward trendline and the May lows). Therefore, shorting the treasuries at Friday's level seemed like a lower risk trade at that entry. See basic chart below.

    Positions: Short term TBT long position, longer term TLT short position.

    Themes: US Treasuries Stocks: TBT, TLT
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