USZ21 – December T-Bonds (Last:159^09)


Treasury Bonds are more than holding their own, considering the Fed is in the throes of the biggest monetary blowout in U.S. history. Last week’s rally came from just a few ticks below a ‘mechanical’ bid I’d advised near the green line (x=159^30).  The ‘mechanical’ trigger implies that the futures are bound for a minimum p=162^26, but we’ll wait and see how buyers handle this ‘hidden’ resistance before we assume significantly higher prices are likely. This week’s commentary notes that a ratcheting down of interest rates to 1.70 or even 1.54 could occur if T-Bond futures are in fact just warming up. _____ UPDATE (Nov 22, 10:04 p.m.): There’s no getting around the worrisome fact that it would take just a small decline from here to generate a nasty impulse leg on the daily chart.  A print at 159^14 would do it, exceeding one ‘internal’ and two ‘external’ lows. Regardless, a very tight ‘reverse ABC’ pattern can be used to try bottom-fishing before, or just after, the lows have been breached. _______ UPDATE (Nov 23, 6:15 p.m.): The trade showed a small profit of $240-$450 before it was stopped out with the creation of a menacing impulse leg on the daily chart. A further drop into the no man’s land above the October low at 157^03 is coming next.