I have been pretty vocal about these targets, and we are getting very close to nailing them; today could be the day for a (probably temporary!) bottom to the bond drop.
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On Tuesday night, I said we needed to maintain support over the 1394ES level in order to still view the upside as a reasonable possibility. On Wednesday we rallied off the overnight lows that held support over 1394. But the move up was an ugly pattern which seems to be best counted in waves of 3, so that we do not have to force an even more ugly count. This leads me to the conclusion that it is a possible leading diagonal. And, I have mentioned many times in the past how much I like to rely upon leading diagonals for trading purposes, but this is what the market has been giving us for 1st waves all too often.
Therefore, IF this is a leading diagonal, then either wave 2 has already completed in a very shallow manner, or we will see a much deeper wave 2, which is more typical of leading diagonals. But, if you remember the larger wave count I posted on the 60 minute chart today, the expectation was that wave 1 of wave iii was going to target the .618 extension at the 1406ES level, which is exactly what we seem to have gotten today. Therefore, based upon how we move up tomorrow, assuming we do see upside follow through, we will be targeting the 1412(1.00 extension) or 1416 (1.236 extension) levels for wave 3 of iii.
Somewhat to my surprise TLT gapped down through major support at 123.5 to 124 yesterday, and almost made it to the sloping H&S target in the 121 area. Realistically I am expecting more downside on TLT after this break, though we might first see broken support retested and possibly yesterday morning's gap filled first. There is an OK looking double-top indicating to the 116.5 to 117 area, but the quality isn't great and I'd prefer to consider the trendline setup as I think it is more likely to deliver the correct target.
First trendline support is decent and is in the 118 to 118.5 area. This is my minimum target unless we see a strong and fast recovery over broken support, with it held afterwards. On a break below 118 to 118.5 I have possible rising channel support in the 110 – 112 area. On a break below that support trendline TLT should be in a primary downtrend, with the obvious target in the 92 area. However the next major support level is in the 107 to 108.5 area and that is particularly important as that support level is a possible H&S neckline for an H&S that would target the 84 area, subject to exactly how that formed. Any further downside on TLT will tend to support equities while it lasts, though the correlation isn't tight: