Bulls sashayed up to the threshold of Tuesday’s high yesterday but had to pull back for a running start to clear it. This strongly suggests that the Bonds are not fixing to make a meaningful turn here on the basis of some vague notion that QE3 was ruled out by Heli-Ben’s testimony before Congress. More likely is that the March contract will continue lower, to the megabearish 112^28 target given here earlier (see chart), and that long-term rates will climb well above 5% in the process. In the meantime, don’t be surprised to see feints, head-fakes, foot-fakes and all manner of hysteria in the vicinity of 117^18, the midpoint pivot associated with the target.
