Wednesday Morning Thread

Gator's Chart of the Day: TBT

The Bearded One had no hints of QE3 in the FOMC meeting minutes.  This seemed to surprise traders or the algobots or both.  Maybe I'm the one that is out of step but the news was just what I expected to hear.  I admit I did not expect the rather violent moves we saw in the last two hours of trading but the market is full of surprises.

Interest rates climbed (good for banks that are making good loans) as traders sold off the 20 year treasury bonds.  This could be seen in the drop in price of the TLT that tracks those bonds.  That caused a pop in the TBT which is a 2X inverse of the TLT.

The TBT was in a volatility squeeze in early March and it did move up rather sharply in mid March before pulling back to test that break out.  It appears the test has been passed and now the TBT is headed higher. Volume has been elevated since the breakout with all but one day since then exceeding the 50 day simple moving average. Today the volume was highest in nearly three weeks. There is some resistance above but not much.  Support appears to be just below 20 (the low today was 19.90) and if you want to trade TBT that would be a good stop.