Shorting Treasuries? Wouldn't you rather wait for these higher price targets to complete during the weeks ahead, first?

Is it really time to short US Treasury bonds again? It's a question I reviewed over a week ago, when citing an article by Marty Chenard posted at SafeHaven.com pointing out that a triangular consolidation was about to send US Treasuries strongly in one direction or the other. I.e., definitely significantly up OR down. So I looked at it and posted charts here, pointing out that the indicators suggested upward. Of course, that also fit with my overall wave count or pattern view of Treasuries - but still, we need to consider the indicators too. If Treasuries along with the well-known ETF, TLT, were going to break downward from that consolidation, those indicators would have shown negative divergence along the consolidation time frame. Instead, the indicators were consistent with TLT breaking upward. Since then, TLT rose, then pulled back to moving average support, and starting rising again.

While I acknowledge that the technicals are not incredibly bullish, there's still positive money flow into TLT, and the wave pattern suggest that it should have at least another bounce up toward the area around 102. The default P&F at Stockcharts.com even suggests a higher objective, toward 113. I'm not sure I'd go that far, but even a move to 102 will be nice. I've also included the default Stockcharts.com daily and weekly charts that go with their "gallery view" for TLT. While its daily pattern stalled out today - still under that important 200-day moving average - and the PPO could be construed as a "bear kiss" before another move lower ... the raw volumes today and yesterday were good.

And when you look at the weekly chart at bottom, the PPO is positive and still rising, with the faster-moving indicator line above zero. From a fundamental perspective, while we "all know" that people shouldn't want to be buying Treasuries - the fact is, there's still substantial buying going on. So long as there's enough buying to lift prices, for whatever reason, I don't see that it's a good idea to be on the short side of this trade.

If you want my more bearish thoughts on the longer-term picture, I can picture that Treasuries and TLT are working out a large "B" wave upward which hasn't yet retraced the full amount that it should. The fact that the huge drop had internal symmetry does suggest it's theoretically possible that bonds reach new highs - but don't worry, I haven't gone off my rocker and I'm not suggesting that. I'm just suggesting that symmetry sets up that downward movement as a large 3-wave ABC type move that can generate a healthy B-wave bear-market rally. Later on, when a B-wave bounce has completed, it's the ensuing C-wave down to lower levels that should be a really great short.

Meantime, if you want to have a swing trade position in TLT but you're nervous about taking the long side, then just "keep it simple" (KI$$), and use good stop management to stop out if it makes a lower swing low - I think you could pick any of the price levels of the recent swing lows on the daily chart (below), with the exact price level depending on your risk tolerance. Falling under those prior swing lows, and obviously if it loses the $87.00 level, would of course say that selling is the way to go.

But I'm not seeing that yet. First, let it complete the likely B-wave bounce ... or if for any reason that isn't going to happen, let it prove by price pattern and technicals that something else is going on. So far, by price pattern and technicals, it's still got higher levels to reach before this bounce is done.

And if you don't believe me, will you believe Tony?! Tony Caldaro's Elliott Wave Lives On site includes his public charts link, and when you go there and navigate to page 10 of his public charts (yes, he's done a ton of diligent Objective Elliott Wave work in all those charts!), you'll find the chart I'm posting at bottom here (thanks again, Tony!). Looks like he's counting it a little differently than the way I do - he's using a truncated wave 5 to complete his "a" wave count down. Either way, we agree on the idea that there's a "b" wave rally that hasn't completed yet.