Bond and Note Boxes

Here are hourly charts of the September t-bond futures and 10 year note futures. I have drawn the hourly boxes which are controlling the downtrend from the lower top made on June 27.

I still think the bonds will make it down to 115-04, the bottom of the current box, and that the notes will drop to 111-00, the 1/2 division point of the next lower box. Once these support levels have been reach I expect both markets to rally above their June highs. The bonds should enter the 121-123 zone and the notes will probably make it into the 115-116 zone.

I don't think sentiment is yet bullish enought to indicate an important top. Take a look at this recent Mark Hulbert column for his view on this. But a rally in the bond futures to 121-123 would put the cash 27 year bond at the lowest yield if the past 40 years. This would probably be a headline news story and the catalyst for excessive bullish sentiment that needs to accompany an important top.