A storm is brewing?

If you are in the market long enough, you should fear of no fear. Given what’s going on around the world with a lot of major events happening or going to happen in the weeks ahead, my cowardice part is telling me that we should see a lot of volatility at the moment.  I would think the fear index, VIX, should be around 20 or so prior to the mostly watched US presidential election on Nov 8. But where is the volatility and fear? Nope, Aucun, Nada !

VIX was historically low around 12-13 instead just days ago. Yes it did pop up to around 15 due to the new development that may impact on the election, it is still not overly high suggesting much nervousness.  So let’s think about it. We all know that this is not a normal presidential election; maybe it could be called the most hated election in the US history. Regardless which side you are with, we have to agree on one thing, both candidates are hated by the other side, not to some degree but extremely I’d say. It is not my business which one you will vote but the election result will profoundly change the political paradigm in the US for sure. As of now, the general market wisdom is that the Wall Street should be happy to see a win of HC as it will mean business as usual with no uncertainty. If Trump wins, it would be viewed as a major negative as he is not a conventional politician and will bring a lot of uncertainties. That’s what the market will hate.  Now just days before Nov 8 and we don’t see any fear in the market with total complacence, I guess the market is universally expecting that HC will win, even factoring in the FBI probe into the HC email scandal. No surprise so what is fearful. In other words, the market has priced in the HC winning and is almost universally standing on one side at the moment. Sounds familiar? Yes, at least to me. This very much reminds me what we were seeing from the Brexit just a few months ago. Prior to the vote, overwhelmingly (including yours sincerely) the expectation was that UK would stay and Brexit would not happen. Then a big surprise hit the market!

Given the extreme complacency, my contrarian part tells me we may see something really surprising. Yes, the polls are consistently telling that HC is more likely to be elected.  The thing is, as I said this is not a normal election and Trump is not a normal politician. Don’t make a conclusion too fast based on the conventional polls. For one thing, Trump is greatly loved by the grassroots, those living deeply down the social stairs. How do I know? Well, you may want to review this interview with JD Vance, who served four years in the US Marines and graduated from Yale University Law School (http://www.theamericanconservative.com/dreher/trump-us-politics-poor-whites/). Vance is in the elite circle now but he was a hillbilly from the poor 'white trash' roots in Middletown, Ohio. He told his own story in the book “Hillbilly Elegy”, the story of an entire 'tribe' of poor white people whose standard of living peaked 30 years ago and has never come back again. One message Vance, now a lawyer, is that government programs can do very little to affect things. If no fundamental changes, the future of this large group of Americans (black or white) looks bleak. Believe or not, Trump is viewed as representing this low class group, which is by any measures not small. But this large group is likely neglected by the polls done by the major media. And the real surprise may come from them, voting for Trump, not HC that decides the result of the election.

I’m certainly not a prophet that I can predict the result. But at least I know that it is prudent to be prepared for a storm, a huge storm that may be brewing. So what the market will do if Trump surprisingly wins?  Brexit brought down the market by 5 or 10% I forgot. Trump’s win will be viewed as a much bigger “disaster” for the market. I don’t know how much it will crash the market but I won’t be surprised to see a 20-30% crash over a few weeks. When this kind of shock hits the unprepared market, VIX could jump from low 10s to 50 or even higher within days.

Considered you are warned and discard this message at your own risk. 

How to play with biotech stocks

The selloff of biotech stocks lately is quite brutal. If you are caught up in it, you must be feeling a lot of pain.  Due to the nature of the biotech business, it is really challenging to predict which way it may go short term, even if you are great in science. This is especially true to bet for the so-called clinical stage biotech companies, which have no approved products on the market yet but only those in clinical trials. The binary result of a trial could turn a stock into moon if positive, or into hell if negative. I was asked how to play with it. There is really no easy way to play with such stocks with extremely high emotions attached. Covered calls are relatively safe but the safety is limited to how much you've covered and the upside is capped as well. For such a binary trade with high volatility, straddle (buy call and put at the same time. Just google for more details) is often used but it costs a lot to start with. I think it is better to use this strategy shortly before the expected PDUFA date (the FDA expected decision date).




Personally I tend to use a  "managed" covered call/spread strategy, for which one needs to actively monitor and adjust the position accordingly. Here is the real example:


I talked about JUNO a while ago when it got clobbered and I set up a JUNO call spread around $27. Given JUNO was wandering for quite a few weeks around $30, my short arm started to have good profit. Just about 3 weeks ago JUNO jumped to $34 due to positive Kite data. This kind of move is often emotionally charged and rarely sustainable. So I covered the short arm with some profit and at the same time, I sold another deep in the money (ITM) calls (down to $25) against the long arm, expecting JUNO would correct fast. This way, I virtually locked the big profit from the long arm while waiting for the correction. That's exactly what has been happening now. So I'm now sitting with a big profit from the ITM short arm and I will lock the profit as well when I feel the correction is done. This way, I could end up with an almost free trade with JUNO, since over long term I'm quite bullish with it and I'd like to stay with it. This of course requires good understanding of option and technical analysis (TA). For clinical stage biotech stocks you cannot analyze them fundamentally but only with TA to get a hint if overbought or oversold.


I'm currently working on another biotech trade with a similar strategy, SRPT. You may recall that I discussed about SRPT recently after it got an unexpected approval: Technically its long-term trend is quite bullish. But the concern is about its short-term trend. It doubled yesterday and got further pushed up today. I think this has a lot to do with short squeeze. The 2 days of strong rally has pushed the stock to its all time high around $55 and it has been unbelievably overbought at the moment. I can hardly believe it has the strength to simply go significantly higher from here without coming back first. So in the near term, I think SRPT has a high risk of correction towards $40 or so. It would be a good buy for long term if it indeed comes down to that level. I was a bit early with this trade and it went against me for a few more days by continuously going up to peak around $62. But I was convinced that it had too much froth in it that must be squeezed out first. So I even sold naked calls against the stupidly expensive prices.  Looks like my patience pays off. SRPT is undergoing the expected correction as I'm writing and it has got a haircut by dropping over $20 in the past 2 weeks and closed right around $40 today.  With that my short arm is more than paying off my long arm and I virtually get paid to wait for its next leg up.


Trading with biotech stocks is never an easy job. Simply buying and holding has great risks and using some hedge is a much better way to play with this sector.

How to be prepared for a potential recession (2)

Further to my blog last week, today I’d like to provide some thoughts about what I’m doing or will be thinking to do in anticipating a potential recession in the next 1-2 years. But let me be very clear from the start that this is not something for quick profits. Actually except those dividend stocks or gold stocks that I do considering potentially very profitable in the long run, the other measures are more for protection purpose. Just like insurance, you pay a little money to protect from a disaster but you hope the disaster will never happen and you don’t expect to see any profit from the premium you pay. This is kind of mindset you should have here as well. Also, unlike some people who may think that what is not happening now is not something that will happen and needs to be worried about, I treat it as a devastating trend that we need to be well prepared for and therefore you need to have a long-term strategy in place. OK, let’s go into the details.   

• Regardless whether a recession will hit or not, it is always a must to build up a long-term portfolio with quality stocks, especially those with track record of paying increasing dividends for decades. I’m fanatic about dividend reinvestment for long term. Such stocks will not only fares much better in a recession, the declining prices of such stocks will actually bring you more wealth than increasing prices over time. You can sleep well with them as you know they are making money for you regardless what happens. From time to time I discussed such quality stocks here and will continue to bring some ideas when the time is right. But for now, you may consider WMT and TJX. They have been under pressure lately but they tend to do well if indeed we are moving towards a recession.

• I hold a lot of precious metal positions as I believe gold/silver has started its next bull run. They will also be one of my major hedges against the market downside risk. As I talked about a few times in the past few months, a sizable correction is ongoing in this sector. I think gold may challenge its next strong support around $1200 in the weeks ahead. But I’m super bullish about gold and silver for years from the long-term perspective and will take this correction as a great opportunity to buy more.  

• Now more speculative measures as insurance against a recession. There are a few ways to do it. Again, keep in mind, the following ideas are generally going against the market. There is no hurry to open such positions but do take your time. We may see a wonder rally towards the year end, especially if H Clinton wins the election. This will be a great time to gradually buy the hedges when they are cheap.
• I must say the market seems very comfortable and complacent at the moment, considering the degree of risks involved.  With the volatility index near its all time low, buying some inverse funds to hedge for your overall portfolio should be considered. Here you can find more detailed information about such ETFs. One ETF in particular I’m interested in is SEF. This is an inverse fund against the financial sector. If we are indeed going into a recession, the financial sector is likely one of the leading forces to bring the market down. Buying SEF gradually at its dip will be my strategy. 
• More aggressively, having some short positions should also be considered if one is comfortable with doing that. Think about it, when the overall market is in big trouble, what will fall the most? Those already being struggling financially and better are on their way to bankruptcy!! A couple of such companies you can consider: SHLD (anyone still shopping in Sears?), IHRT (the largest traditional radio station in US; anyone still listening to such radio?),  DB (the biggest trouble boy in the EU banking system that may trigger a worldwide Tsunami), and VRX (still tremendously struggling legally and financially). You may directly short them but considering it is not a short term play, a better way to short them is to buy long-term deeply out of money put options. The idea is to spend very little money but to get 10 times more money back if they indeed crash over the next year or two.  If you don’t know how to play with option, better spend some time to study and master the technique as it is a fantastic way to help you minimize your risk with much less capital needed.
• Last but not least, a more complicated option strategy that can work very well to protect your holding positions. Let’s say you have a few long term stocks that are doing very well and you want to continue to keep them. Naturally you don’t want to see them go down even on paper, right? Here comes handy with the so-called Collar strategy, that is exactly for this purpose. Briefly, against your withholding position, you sell the equivalent number of contracts of long term calls at or slightly above the current price and at the same time, buy the same dated puts at or slightly below the current price. This way, you use the premium got from selling the calls to fund the premium you pay for buying the puts. Quite often you end up with even and pay nothing to establish an insurance that will totally protect you from a disastrous crash of the stock.  Sounds confusing? Well, believe me, your time and efforts will be very well worth to spend to fully understand it.

I hope this little blog can help you at least to open your mind to start thinking about what and how to be prepared for a recession that may hit us in the months ahead. The trend is not great, considering we are seeing continuously declining GDP quarter after quarter and now the contraction of manufacturing activities. As I said before, we haven’t felt the recession yet simply because everything has been largely manipulated by the Fed with unchecked supply of money. But wait to see what will happen when the Fed finally starts to seriously move interest rates up.

A big lesson everyone should learn from

A big lesson that I have leant in the past decade of my investing/trading life is to go against the herd and main stream headlines, so-called being contrarian. Most often than not, when everyone is betting on something, the turning point is not far away and you can bet with some confidence to go against the trend.  Here is the latest example about Netflix (NFLX). I didn’t specifically talk about it but I think it is a good example to share as a hindsight.

Recently The Wall Street Journal ran an article called “Netflix’s Picture Getting Darker.” Understandably, Amazon has been a great challenge to NFLX for some time. Here is the conclusion from the article:  “Netflix now faces slower growth and more competition. And in an environment of rising prices prompting higher-than-expected churn [subscriber turnover], the stock’s rich valuation of over 100 times projected earnings looks particularly unappealing. Don’t binge on this stock.”

 NFLX has been under tremendous pressure for months with a lot of doubts and bearish views on it. The WS article was certainly adding further blow to it. Most people in the market are good at doing one but bad thing, following the herd to buy or sell and in this case, the article had for sure caused an intensive dumping of the stocks. Now comes to the key point of the lesson I have learnt: The headline news in the major media often leads to the exact point of extreme and the last exhaustive move is often providing the best entry point to go to the opposite direction.  This was what I did. Tuesday, NFLX gapped up 19% after reporting much-better-than-expected third quarter earnings and subscriber growth. My contrarian theory wins again. See the status of my current positions of NFLX. But be aware, at $130 as of now close to all time high, it is very overbought and likely will come back down in the near future. Again, don't follow the herd to buy at this moment.

Don't be fooled by Buffett

Warren Buffett is my hero as an investor and I very much admire him. But there are certain aspects where I totally disagree with Buffett. For one, his view on gold. And for two, his views on politics and tax. To me his views are vary naïve and to some extent even stupid in my taste. Recently Buffett has openly criticized Trumped on the tax issue in order to support HC. He has misled people into believing that he is not one who will take advantage of using tax deduction to his or his company's benefit. I must say Buffett is very hypocritical here in trying to promote his political agenda by misleading the public. Do you really believe Buffet dose not try to avoid tax? I just saw a write up by Alex Green, a former Goldman Sachs hedge fund manager. He has explained very well why Buffet has been doing nothing different from Trump in tax avoidance. I extracted his writing below for your information.

Where Donald Trump and Warren Buffett Agree

Alexander Green, Chief Investment Strategist, The Oxford Club
My recent column on Trump and his tax deductions generated a firestorm of feedback from readers.

It's not hard to understand why. Trump gets people's dander up. And so do taxes.

After the second presidential debate, Warren Buffett, an outspoken advocate for Hillary Clinton, stepped into the spotlight and disclosed information from his own tax returns to refute Trump's claim that he too used the complicated tax code to take "huge deductions."

The two billionaires differ sharply on taxes. But only in how they talk about them - not so much in what they actually do about them.

Buffett has often called for big tax increases on America's highest earners, even though - according to the IRS - the top 2.7% of U.S. households pay more income taxes than the other 97.3% of us combined.

But soaking entrepreneurs, business owners and investors does not incentivize business expansion, innovation or job creation.

Trump, on the other hand, wants to reduce personal income taxes for almost everyone. He also wants to cut the corporate tax rate from 35% to 15% and eliminate the estate tax entirely.

Polls show that Trump's chances of getting elected are growing increasingly dim.

But his tax proposals - while far short of the drastic reform and simplification the tax code needs - are a good starting point for discussion.

I have much more respect for Buffett as an investor and a philanthropist. But, at least in this instance, Trump is actually being more forthright.

How can I say that when Trump hasn't even released his tax returns? Because Trump doesn't deny he has used the code to minimize his taxes.

That's legal. And virtually all taxpayers do it, including Warren Buffett.

Buffett claims that his secretary pays taxes at a higher rate than he does. Yet he generally neglects to note that his annual salary is just $100,000 - and he takes deductions for his generous charitable contributions.

Moreover, let's not forget that Buffett is one of the world's wealthiest individuals precisely because his $64.8 billion fortune is almost entirely untaxed.

Like Trump, Buffett has used aggressive money-saving tax strategies, not so much on his personal returns, but most definitely with Berkshire Hathaway, the primary source of his wealth.

In 2014 and 2015, Berkshire did three "cash-rich split-off transactions" that allowed the company to avoid more than $2.5 billion in capital gains taxes.

This was not unusual. Buffett has long made an art of tax avoidance. For instance, Berkshire had money behind the recent Burger King-Tim Hortons inversion, helping a U.S. company avoid taxes by departing to Canada.

Buffett has famously said that the capital gains tax is not a tax on capital gains but a tax on transactions. So he makes very few of them.

He claims his favorite holding period is "forever." Indeed, he has held companies

"Let's not forget that Buffett is one of the world's wealthiest individuals precisely because his $64.8 billion fortune is almost entirely untaxed."

like American Express, Coca-Cola, Procter & Gamble, Wells Fargo, Graham Holdings and others not just for years but for decades.

In addition, Berkshire Hathaway has never paid a dividend in the nearly 50 years since Buffett began running it. So, over the last half-century, he has never paid a dime in dividend taxes on his multibillion-dollar Berkshire holdings.

Buffett won't be selling his own shares of Berkshire and paying capital gains taxes on them down the road either. He has pledged most of his fortune to the Bill & Melinda Gates Foundation.

That's a worthy thing to do. However, his contribution came with a single string attached. The donation is contingent on charitable contributions remaining tax-deductible.

By doing this, he will also dodge estate taxes on those shares, depriving the government of tens of billions of dollars of tax revenue.

In sum, both men take advantage of personal and corporate tax breaks. Trump admits it. Buffett doesn't talk about it.

Trump wants to make sure no one pays estate taxes. Buffett is only making sure that he himself avoids estate taxes.

I'm no great fan of Donald Trump. But when it comes to taxes, you'd be well advised to ignore what Buffett says.

And just minimize your taxes - the same way both men do.

Good investing,

Alex

How to be prepared for a potential recession (1)

I have been laughed at by someone that I kept talking about the potential of recession. For them, unless you immediately feel it, especially via the stock market, where is the recession and why keep talking about it? Well, for me this is a trend that potentially can be very devastating if not well prepared. While I’m not stupid enough to try to claim that I know exactly when the next recession will occur, I don’t feel shameful to be a crying wolf on it. After all, it will almost always be too late if you simply wait for it to be felt in the stock market. Just think about what happened before the dot.com crash and before 2008. Universally nearly everyone was euphoric about the ever increasing stock market and did not think a market crash would ever be possible, then it hit and hard without pre-warning. I think more and more evidence has emerged that the US may go into a recession in the not too long future but I don’t know exactly when. You see, the US GDP has been declining for 5 quarters executively and more than likely it will become 6 after the current earnings season is over. The financial world around the globe is in a total mess and very chaotic. We would probably have already seen the recession several times over if without the Fed and Central Banks around the world manipulating the interest rates and printing trillions of dollars from the thin air. All of this must have a consequence. It is not if but just when. Actually if we factor in the real inflation rate, we are already in a recession. Now another worrisome development is sending a signal silently. Libor or London Interbank Offered Rate is the most widely used benchmark for short-term interest rates between banks and is considered an accurate indicator for the health of the banking industry. During normal times, the 3-months US$ Libor is generally stable around 0.3% but during a financial crisis, it could shoot up to above 1%. E.g. Libor skyrocketed to 1.4% during the financial crisis in 2008/09 and since then, it has declined and stabled around 0.3%. But lately it is moving up to 0.8% without many people noticing it. It does not mean a deep trouble in the credit markets yet but it certainly suggests a worsening state of the global banking system. Wait to see what will happen when Libor touches 1%.


While I’m not expecting everyone would agree with me and share my worries, I’m glad that some friends with rational thinking are seeing the same thing as I do and are asking me what one may do to be better prepared in case the worst comes. I will share some thoughts next time.

Another great concern for the long term Treasury

I talked about the possibility that we are seeing the final top of long term Treasury bonds (or bottom of the long term interest rates). To monetize this idea, I have initiated the trades via TBT and have already got some short term good profits. The most recent one was last week that I took the profit by closingTBT in anticipating a rebound of TLT. Looks like this is indeed what is happening now. While I think this is the beginning of a very long term downtrend for long term bonds, certainly it will be naïve to think this will be a straight line down. I think there are many opportunities to do swing trades with TBT/TLT. Now we have another time bomb that may trigger a landslide for Treasury.

 
Not sure if anyone has noticed that the US Congress has just done something historical with a slap on the face of Obama before his leaving: they overrode a veto by Obama and passed a law allowing families of nearly 3,000 people killed in the attacks of 9/11 to sue Saudi Arabia for damages. You may ask what’s the big deal. Well, the SA kingdom is not a small dog for the US. On the contrary, it is one of the biggest holders of the US Treasury and other assets, estimated at $700 Billion. SA has already threatened that if this law is indeed implemented, they will dump the US Treasury in retaliation. If that happens, just wait to see the avalanche crash of the long term bonds and skyrocketing interest rates. Of course no one knows for sure if this is just a rhetoric threat or something they are really seriously about. But considering the initial trend already started, I’m not sure you want to fight against it. Buying some TBT at dip is not a bad idea for a potential bombshell in the bond market. After all, there is very little chance, if any, that you can make any serious money from the long-term government bonds. The risk is simply too high!

Stable buying power for hundreds of years

I’m a long-term gold holder and my faith in it will not change for very long time, if not in the rest of my life. With what’s going on around the world, gold will only become more valuable in the future. I cannot foresee anything at the moment that will change my view. I outlined before a few fundamentals that support a higher gold. Now a new research is just released, in which the author checked the data for hundreds of years from 1600 till now with the following methodology:

" When examining the value of gold we have to measure it in terms of goods and services. In this day and age one might forget the end goal of any participant in the economy is goods and services. All else traded in our vast financial system is merely a means to an end. All sorts of money, but also stocks, bonds, credit default swaps, options, futures, etc., have no use-value for humans as we can't eat, drink or wear them. Only goods and services we can truly use (for more information regarding use-value please read my post The Concept Of Money.) Therefor, to measure the stability of gold's value we have to compute the amount of goods and services gold can buy. For the sake of simplicity, we'll use publicly available Consumer Price Index (CPI) and Wholesale Price Index (WPI) data to measure the value of goods and services."



Here is the overall conclusion from the exercise:

“We can conclude, while there is no exact constant in economics, the stability of gold’s purchasing power is unprecedented. Not only on a gold standard the metal shows it’s constant nature, but also off the gold standard gold’s purchasing power is remarkably constant, albeit more volatile in the short term.”

 
Again, regardless how high gold will eventually go, it won’t be a straight line up. While gold is very constant in value, the traders on it are very emotional and can easily become very hyper and euphoric within a short time period to make it ahead of itself and then very depressed and pessimistic due to some short-term factors. As I have warned for quite some time in the past few months, gold has indeed entered a more serious correction at the moment. Baring from any black swan showing up suddenly, the correction may likely go for a while before we see a bottom. Who knows, maybe the upcoming presidential election could trigger its next bull leg up. As a longer term investor, I’m happy to see it go down more to allow me to buy more. As a trader, I’m happy to see the volatility that allows me to do swing trades and plant seeds for long term.

Medical hackers?

 It is not a safe world anymore. Along with the big trend of more and more activities conducted online, criminals can make all kinds of malicious attacks. It is not news anymore if your financial accounts or email have been hacked. But I bet you would probably have never thought about a cyber attack to medical devices!  Johnson & Johnson has just told patients that they have identified a security vulnerability in one of its insulin pumps that a hacker could use to overdose diabetic patients with insulin. If you are not sure what it means, then in layman’s language it is that  too much insulin (overdose) could cause low blood sugar (hypoglycemia), which in extreme cases could kill patients. In August, there was a report saying that heart devices from St. Jude Medical Inc had potentially life-threatening cyber vulnerabilities and St. Jude’s prices tumbled due to the news. 

 

You may not think this is anything to do with you but potentially it could in the future. Think about a scenario. If someone has a relative (important to him/her) who relies on a diabetic pump or a heart device or other device that is critical, instead of kidnapping, a hacker could use an cyber attack to control the device and then ask for money or kill. Sounds like a fiction but I won’t be surprised to see this happen in the near future.

 

From the investment perspective, buying some cyber security stocks will be a great idea and moving forward, this sector will only become more and more demanded and red hot. If you don’t know which companies to buy, then simply buy the ETF for security stocks via HACK. See some details here.  

Too good to stay

Technical analysis serves me very well again. I made a “perfect short” as I phrased it for shorting the long term bonds. Here is what I said: Looks like it was a good call as we are exactly seeing this in TLT, after hitting $133 it has moved up to $138, a point exactly lining against its resistance. Technically this is a perfect spot to short with a high probability of winning.

 
The timing was perfect as TLT almost immediately went down and hard for 2 days! And my trading via TBT calls has doubled within days. With such a fast move and profit, it would be crazy to stay for more, although TLT may certainly go down more from here. But, this is a big but, if TLT tries to make a dead cat bounce after a hard drop, the gain from call options will evaporate easily. I don’t want to see it happen. If you are the ones making a similar trade with me and having seen a good profit, don’t be greedy and better to take the gain now. The coming Friday’s job report can easily move the bond market and no one knows for sure which direction it will go. If TLT indeed bounces back to its resistance, it will be another perfect short to make, at least for me!










By the way, I do still keep my naked TBT puts for now, expecting for further downside risk for TLT. It is much less sensitive to the short term moves of TLT and I don't need to be exactly right to make money.

A perfect short

Two months ago in July, the long term interest rates hit its lowest point not seen in almost 40 years. In other words, the gigantic bull run for long term bonds lasted for nearly 4 decades has reached a peak none one could have imagined years ago. But likely this amazing bull run has run its course and we may have very well seen the extreme bottom of the long term interest rates, i.e. below 1.5% for 10 years bonds or around 2% for 30 years. Since July, the long term interests have moved up. While I cannot say for sure, I do believe new era has been born that moving forward, a gigantic bear run for long term bonds has begun and accordingly the long term interest rates will rise significantly from here. Of course, it won’t be a straight line up but as long as the July low is not breached, the uptrend will be intact.

 
I talked about this a couple of weeks ago. But at that time the long bonds (TLT) was kind of in a sharp move downward within a short period of time. As such I said we could see logic dead cat bounce to release the oversold condition. Here is what I said: As a trader, I will consider to buy TBT, a leveraged inverse ETF against long term bonds (e.g. TLT). TLT may be a bit oversold and is due to rebound in the short term but any bounce is likely an opportunity for buying TBT to bet for the next leg down for TLT.  Looks like it was a good call as we are exactly seeing this in TLT, after hitting $133 it has moved up to $138, a point exactly lining against its resistance. Technically this is a perfect spot to short with a high probability of winning. Buying TBF (an inversed ETF against TLT) or more aggressively TBT (leveraged inverse ETF against TLT) can do the trick. If I’m right, there is little chance TLT has energy to go above $140, a  level from which it broke down.