Friday, February 5, 2010

On the eve of the monthly Non-Farm Payrolls freak-out, Treasury futures are near important resistance levels. The bonds have repeatedly failed to surpass a key daily high of 119^08 made in December, and the March Ten-Year Notes confront a double-strength hidden pivot at 118^19, not far above their high for the uptrend of 2010. The best circumstances for shorting this pivot would be an orderly move by the notes above the 118^14 level with the bonds remaining below 119^08 and thus failing to confirm. A move above 118^20 by the notes would point to a D target at 119^31.

As noted in yesterday's update, the relapse to 1059.00 late in the session came close enough to a 1057.90 Hidden Pivot target that we should be prepared for a bullish reversal. If not, and the futures slip lower, a secondary target at 1052.80 can be bottom-fished with a stop-loss at 1051.90. Alternatively, bulls could breathe a sigh of  relief if an upthrust gets from 1077.40 to 1084.70 without a distinctive pause on the lesser charts. That would create a bullish impulse leg on the 3-minute bars, for one. ______ UPDATE (1:01 p.m. EST): Midway into the session, the futures appeared bound for a tradable low at 1037.20. ( They've been as low as 1044.50 so far.)  For the record, bottom-fishing as suggested would have produced a theoretical loss of about $100.  The bounce we were expecting came from 1049.60, just below the pivot, and although it was a robust $15, the breach of our targeted support telegraphed the weakness  that was yet to come.  Now, to reverse the bearish tide on the lesser charts, the futures would need to rally above 1077.30.

A corrective blip precisely from the 74.52 midpoint of the bearish pattern shown suggests its sibling D target at 71.00 should evince an equally precise bounce. Accordingly, oil traders should bid 71.07 with a stop at 70.84. (Posted by Harry)  _______ UPDATE:  The futures sliced through the support on the way down, consolidating beneath it before heading still lower. The theoretical loss on a long initiated as suggested would have been $230.

The Indoos look primed for a follow-through down to at least 9745,  a 2.5% fall from here.  The relevant pattern is shown in the accompanying chart, which includes a midpoint support at 10030 that was trashed near the end of yesterday's session.  The overshoot is sufficient for us to infer that the finishing stroke to the target is an odds-on bet.

Although yesterday’s selloff wasn’t quite ugly enough to write home about, only a fool would dismiss the possibility that the next selloff will be. We checked the Wall Street Journal’s online edition to determine the cause of the Dow’s 268-point plunge, but there wasn’t much to persuade us.  A headline attributed the selling to “Global Fears” about the economy, plus some previously well-exposed worries about euroland’s sovereign debt. But weren’t there headlines in the same newspaper just days ago trumpeting the U.S. economy’s red-hot economic growth for Q4?   Actually, looking back at a whole week’s worth of Wall Street Journal  headlines, readers might have inferred that, Toyota aside, the entire economic world was exploding with rapacious vines and tendrils of growth, not mere green shoots.    Oh well. Perhaps traders all woke up on the wrong side of the bed? Or maybe Mercury was in retrogade. (Isn’t it always?) Whatever the case, the major bourses got socked with their biggest losses in recent months. “Throughout the day,” the Journal reported, “investor [sic] fretted over signs that Europe's governments are struggling to finance their debts and that America's employment picture may not be improving as much as expected.”  Ah, those fretful Europeans! Fey as always, they could probably learn some useful lessons from Americans these days. For one, they need to get over the silly notion that financing their debts might require a struggle.  With the national debt now above $14 trillion and continuing to climb, do we appear to be struggling?  Hell no! In point of fact, not one worker in America has paid even a dime of extra taxes – not yet, at least – to help whittle down that debt. No Psoriasis As for the Government’s ongoing financing needs, when foreign buyers stopped coming to Treasury auctions, did