Trouble with the Curve

The yield curve has predicted almost every US recession and as the Fed raises interest rates with markets at all time highs, some would say the stars are aligning for some doubt around whether President Trump can deliver on his economic policies to continue to lift inflation expectations.

As the US yield curve continues to flatten, what typically resulted in long term bonds costing more to issue may begin to favor the shorter term bonds at least in the near term.  The signals in the market are providing divergence between key indicators and stock market levels of late.  These discrepancies are often resolved in quick movements which take investors off guard.  As China resumes their actions in the Treasury market and both Europe and Japan are full speed ahead, investors have little options but to move into US markets in search for yields with some perceived safety relative to other markets.

  Price Shares Cost Returns R/R
Green Channel 5.68:1
Buy $126.91
$1,649.83  
Reward $137.71 $1,790.23 $140.40
Risk $125.01 $1,625.13 ($24.70)
Cancel $133.26    
 
Blue Channel 1.41:1
Buy $125.01
$3,250.26  
Reward $133.26 $3,464.76 $214.50
Risk $119.15 $3,097.90 ($152.36)
Even $125.64      
 
1st Trade exit @ reward target $82.55  
Total Reward from all applicable channels $297.05  
Total Risk from all applicable channels ($253.24)  
 
Red Channel 1.01:1
Buy $119.15
$4,885.15  
Reward $126.38 $5,181.58 $296.43
Risk $112.02 $4,592.82 ($292.33)
Even $122.32      
 
1st Trade exit @ reward target ($6.89)  
2nd Trade exit @ reward target $35.62  
Total Reward from all applicable channels $325.16  
Total Risk from all applicable channels ($823.64)  
Action to take
Place buy limit order for $13.00 of TLT @ $126.91
Set sell limit order for 13 @ $137.71 AND Place a buy limit order for 26 @ $125.01
Cancel sell limit order 13 @ $137.71, Set sell limit order for 39 @ $133.26 AND Place a buy limit order for 41 @ $119.15
Cancel sell limit order 39 @ $133.26, Set sell limit order for 80 @ $126.38 AND Place a sell stop market order for 80 @ $112.02
Date Quantity Order Price Fill Price Commision Status Channel
  Activity Log User Date
Plan created Dave Friedel 6/27/2017
The plan has triggered buy level 1 since iShares Barclays 20+ Yr Treas.Bond hit the purchase price of $126.91 STOCKPROCESS 6/27/2017
The plan has triggered buy level 2 since iShares Barclays 20+ Yr Treas.Bond hit the purchase price of $125.01 STOCKPROCESS 6/29/2017
The plan has triggered buy level 3 since iShares Barclays 20+ Yr Treas.Bond hit the purchase price of $119.15 STOCKPROCESS 12/12/2017
The plan has failed iShares Barclays 20+ Yr Treas.Bond hit the last target risk price of $112.02 STOCKPROCESS 12/12/2017
The plan has triggered buy level 3 since iShares Barclays 20+ Yr Treas.Bond hit the purchase price of $119.15 STOCKPROCESS 2/5/2018
The plan has failed iShares Barclays 20+ Yr Treas.Bond hit the last target risk price of $112.02 STOCKPROCESS 11/5/2018
Date Type Message Status
Total Records: 0 - Page: 0 of 0
Date Charity Amount Status
Total Records: 0 - Page: 0 of 0
  1. Check Plan Status

    Make sure the plan has not begun yet. Once InProgress, you will need to decide if you want to catch up.

  2. Review the Amount of Capital

    Each plan has a total amount of capital that may be used to execute. You can adjust the amount you want to assign to this plan & press Update & Review

  3. Set your Buy Order

    Each channel will provide a buy price and # of shares. You will want to set the 1st order as GTC at your broker

  4. Set your Reward Target

    When the first order executes, you will need to create an exit order at the target price

  5. Watch the Cancel Target

    If we hit the Cancel Price before the Buy Price, you will cancel the order as the plan is invalid.

  6. Set Buy Order

    When you enter your 1st Buy Order, set the 2nd Buy Order immediately. You can do this at the same time as the 1st order

  7. If 2nd Buy Triggers

    Set the exit for all the shares from 1st and 2nd at the 2nd Reward. This means canceling the 1st Reward target but you should also set the 3rd Buy Price.

  8. Changing your Mind

    If you want to exit the plan with no loss at this point, this is your break even price that you will need to set for all open shares.

  9. Risk for 2nd Execution

    The total risk for 1st and 2nd execution if you use the 2nd risk target to exit all shares.

  10. Reward for 2nd Execution

    The total returns for 1st and 2nd executions if you exit all shares at 2nd reward target.

  11. Repeat like Above

    You will repeat the same steps as above but for these price levels.

  12. Risk for Entire Plan

    If the 3rd Risk target is hit, this will be your total loss for the plan.

  13. Reward for Entire Plan

    If you exit all shares at the 3rd Reward target, this will be your profit.

  14. Interactive Chart

    You can press the Play icon on the chart and it will fill in the chart as days pass.

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