By Jeff Pierce

It would seem that bonds are on a lot of traders minds as TLT makes multi-month lows today and if you’re wondering how much lower this could go then I have 3 targets for you on the monthly chart below.

1. I would say there is a 90% chance this is at the very minimum heading to the $105 region as that seems like a shallow enough area to target and if you’re short maybe take some profits there by trimming.

2. I would say there is a 50% that we just go down to $100/share because that’s a nice round number that may act as a magnet.

3. The pullback that has the lesser percentage chance of happening but wouldn’t be outside the realm of impossible would be a pullback to the major trendline that started all the way back to 2007.  That would mean a retest of the $95-97 level which would qualify for the “end of the bond bull market” easily and could provide a good buying opportunity. I don’t think that would happen for many months, maybe not until summer, but it wouldn’t surprise me in the least.

Where do I think we’ll end up? My thinking is we head down to the $101-103 level and then find support, base, and head back to old highs. Expect this market to be under pressure until then and any rallies to be sold. A good level to get short would be anything north of $119.50 with a stop at this year’s highs.

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