I like to trade the bond ETFs–TLT for long 20-year and TBT for short 20-year. They form trading set ups right out of the text books, move slowly enough so you can anticipate the set ups, follow supply and demand principles, and aren’t subject to stock risks. In fact, they usually go up in times of stock stress and down when stocks are in a bull run. The only real draw back is that they are expensive and you need a lot of shares to make any money; nonetheless, I trade them a few times each quarter just to stay in shape.

While the 1,2,3 Bottom set up is found on all time-frames from monthly to 5-minutes, the longer term ones are rare and generally indicate a more substantive move. After a 14-week decline, TLT is forming a classic 1,2,3 Double Bottom on the weekly chart. The first spike happened in early Jan, then there was a bounce to the declining 15 week EMA, and the second spike down on bullish divergence found support just under 90. This week it looks like we will close strong in an engulfing pattern so the set up will complete with the pivot above the second spike. The early buy point was a daily close above the second spike, or around 90.45. TLT has now rallied for 3-4 days, so new positions should wait until it retraces to the daily rising 20 EMA.