In this morning's guesstimate I said that the September T-bond and 10 year note futures should have only modest reactions before continuing the uptrend that began from last week's lows. The updated hourly charts you see above show that I was wrong about this.
The steep reaction that has developed is bigger than the first reaction and this tells me that the original estimates of rally boxes I posted here are wrong (not an unusual event early in a trend). My best guess now is that yesterday's high defined the top of the first rally box.
In any event I think that today's negative reaction to the GDP news, consumer sentiment numbers and Chicago purchasing manager's report is simply giving weak longs an excuse to sell and encouraging the bears to short more. I think this is strengthening the bullish technical condition of the market and that prices will move generally higher next week.
In the meantime I think that the 115-04 level in the bonds and the 110-30 in the notes will again prove to be strong support and be worst we see on the downside.
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