The futures suffered their most savage drubbing in a while, bottoming so far at the exact midpoint of the pattern shown. This implies that if they go any lower, the midpoint’s ‘D’ sibling at 120^01 is likely to be reached, and precisely.
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T-Bond Futures
The futures are at a crucial resistance — the 124^31 Hidden Pivot midpoint of the big pattern shown in the chart. It projects to as high as 130^04 (!), but there is also a lesser bullish pattern that suggests 128^17 is possible without a lot of strain. It’s midpoint sibling lies at 125^07, so let’s stipulate that if the the futures exceed 125^07 on a closing basis for two consecutive days, they should be considered on their way to significantly higher prices. That would be bad news for equities in the U.S. and elsewhere, since it implies a full-blown panic into the supposed safety of U.S. Treasury paper.
The bullish penetration of a midpoint resistance at 120^23 augurs more strength over the next 7-10 days to as high as 123^07. (The equivalent for the December contract is 121^30.) Secondary resistance at 122^11 can be shorted with a stop-loss as tight as four ticks. ______ UPDATE: The futures spiked to 122^17, stopping us out with a four-tick loss. The overshoot suggests still-higher prices lie in store.
The long-bond futures look like they could continue to do nothing for more weeks or even months. On the daily chart, the last time they created a bullish impulse legs was two months ago, in late June. Since then. however, bullish and bearish feints have canceled each other out, suggesting that indecisiveness is likely to rule for the foreseeable future. A pop this week exceeding 121^31 would change that, turning the picture bullish immediately, but I am certainly not expecting it.
The bonds have looked pretty good these last couple of weeks, but it’s been nearly two months since any rally managed to create a bullish impulse leg on the daily chart. There have in fact been three failures to do so, and this will make a fourth if it fizzles out anywhere south of 122^10.
Is this rally about to deliver on the promise of the strong trend begun in mid-June? If so we should see the futures settle above 118^14.5 by no later than Friday. That’s a midpoint resistance whose ‘D’ sibling lies at 119^22.5, and although it has been slightly exceeded intraday (by two ticks), a more conclusive breach is needed to clinch the bullish case for the near term.
In just a week’s time, T-bond futures have given up more than half of their impressive gains from the June lows, creating a nasty impulse leg on the intraday charts in the process. Now, they are probing for support which, from a Hidden Pivot standpoint, could materialize as high as 115^28.5, or at 115^14 if any lower. However, if the lower number is exceeded on a closing basis, we could see further weakness over the near term to as low as 113^30. _______ UPDATE (10:52 a.m.): The 115^14 target caught the low of this morning’s swoon within a single tick. The futures have since recovered by nearly a full handle, but if they should revisit the low and close beneath it, 113^30 would become the new downside objective.
The bonds don’t look like they are in very good shape. They have spent the last four days trying to get through po2 on the daily chart at 121-14. The target price for this move higher is 122-26. For price to start lower it will have to go through 118-14 and then the first price objective would be 115-24. There remains downside pressure on price, but price remains at the same level.
The 60 min chart has downside pressure being applied to it, but it is an over extended area and trying to turn up. Price has tried to reach po2 at 119-21 with no luck. If price can get through 120-11 then P would be 120-29.
Now the question is, are the bonds contra to the Dow? If the bonds rally, will it be a flight to safety?
The daily chart has downside pressure being applied to price and the entry price for a move lower would be 118-24 with P at 116-04. The upward price action was stopped by PO2 at 121-15. The up move isn’t voided yet and the second price objective would be 122-29. The 15 min. chart looks a little better. Pressure is trying to turn up and apply upward pressure on price. The 119-28 area offered resistance and on this move higher 119-20 and 119-24 could be stumbling blocks. 119-10 should offer temporary support. If that level is broken then look for 119-01 for your next stop.
Ira
The bonds are in limbo right now. On the daily chart, price would have to go through 116-19 and then P would be 113-29. For the up move to continue price would have to go through 118-26 and then the P would be 119-03 and the longer cycle price objectives remain the same as yesterday. There is still downside pressure being applied to the charts and the 119-04 level continues to act as resistance. The night session could carry price down to the 118-18 with a D of 118-00. (IT)
