We're still in knee-jerk reaction mode. It will take another day for yesterday to sort itself out in terms of the longer picture. Fed decision day is great at providing quick scalp trades. Great doesn't always mean profitable. There were times yesterday where you could go from up nicely to down within a minute, and vice versa. Perhaps volatile is a better word than great. It simply depends upon your view.
We didn't get a relief rally in Treasuries or precious metals. What we did establish was a clear low on the iShares 20+ Year Treasury Bond ETF (TLT) . Today's low matches perfectly with yesterday's low and lines up within pennies of the Dec. 12 low. There's your stop. Well, I would tend to give it another $0.30 or $0.40 to lessen the chances of your stop being taken out on a whoosh right before a recovery.
On a much longer-term view, monthly, TLT needs to see a reversal into the end of the month. I will say it shapes up better than gold in terms of the secondary indicators. Momentum, volume, and trend have been supplanted in bearish territory for several months and may be approaching an oversold reading or two.
The issue is price. TLT doesn't have clear-cut support for me on the monthly view until the $110 area. Unfortunately, I don't believe it to be strong, and bulls will be relying on the congestion support between $95 and $105 if we fail to see a bounce above $119 before 2017 kicks into gear.
Ironically, the SPDR Gold Shares ETF (GLD) seems to have the exact opposite problem. Price support is merely a few dollars below the current price, at $105. Below that, we should find additional support at $100.
The rub for GLD lies in the secondary indicators. Momentum, trend, and volume are all crossing bearish this month. These crossovers have been very damaging over the past decade. It sets us up for a situation where any bounces into $115 should be sold, or a bearish play should be considered, until GLD proves itself further. I would consider a counter-trend trade, should we push to $105 (half-size) and get more aggressive around $101 to $102, with a tight stop below $100.