Long Bond Short: Largest, Ever

As reported by Steven Van Metre, here, the long bond speculators have an historic, all-time massive short position. 

He shows their net position is four standard deviations away from norm.  The chart he references can also be found at Zero Hedge, here.

So, just how significant is that?

The bell curve chart shows the typical 3-standard deviations cover 99.97% of all data observations. 

We may as well say that four standard deviations cover all data:  100%.

The speculators are so convinced bond price are going lower (interest rates up), the have amassed a huge position.

Now, it gets interesting. 

The chart below of TLT (long bond), has bonds currently declining in a measured move that projects to the 152.5-level.  Feeding into the speculator’s positions (giving them a gain thus far).

We also have a Fibonacci time sequence in effect for TLT.

It that’s met in the coming week (and we get a new low), it will be a Fibonacci 34 weeks from the high set during the week of March 13th.

If TLT penetrates the low set on Week 13, and depending on how far below support that penetration goes, it will set up a Wyckoff spring condition … setting up the TLT to move higher.

Moving higher is against the speculator’s positions.  They are short and the index would be moving up.

It could potentially be the largest short-squeeze of all time.

If that happens, think about what will happen to the markets, the dollar and the precious metals markets.

Stay tuned.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.
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