Swing Trading TBT versus SPY October 16, 2013

In todays market environment, the talks between The White House, Senate, and The House of Representatives, two ETF’s are reacting to most every announcement of success and/or failure of negotiations.

The SPY ETF represents the S&P 500 index. The S&P , according to the ‘talking heads’ will rise once the Debt limit talks lead to an increase in the National Debt limit. The same commentators also believe that the S&P will decline if the Debt Limit talks lead to some kind of so called default in our payments.

At the same time, if the Debt limit is not increased and the U.S. Treasury is forced to make choices in payments and a default in payments is somehow imminent, interest rates are, according to the same ‘talking heads’ will rise. If rates increase, then TBT, the Pro Shares Ultra Short 20+ Treasury will increase in value.

The ultimate pair to day trade, as news ebbs and flows is the TPT-SPY pair.

They should fluctuate in opposite directions.

The following chart of the 3 minute price action of the pair should be of illustrative value.

TBT-SPY 3 Minute 10-16-13