Bond and Note Boxes

In my May 26 post on the bonds and notes I said that the reaction in the bonds would carry down to 115-25, the 1/2 point of a box and that the reaction in the notes would carry down to 112-06, the 1/2 point of the next lower box. In each case I was expecting a drop of a full box from the preceding high point.

In both cases the market only reacted 3/4 of a box from the high. This is an indication that the uptrend which began from the March 2005 lows of 109 in the bonds and 107-26 in the notes is still strong and intact.

The top of the current box in the notes is at 113-23 while the top of the current box in the bonds is at 117-30. I think it likely that another brief reaction will start from these levels and will carry each market down 3/4 to a full box.