Wednesday, September 07, 2005

Bonds and Notes

Here are updated hourly charts of the December t-bond and 10 year note futures.

The reaction from last week's highs has been deeper than I expected, but then it is always hard to predict the extent of reactions against the trend. My policy is to expect smaller reactions rather than big reactions as long as the trend potential is still great. That way I won't be on the sidelines if the market is even stronger than I expect.

I think this reaction will now carry the bonds down to the 1/2 point of their current box near 115-28. The notes should drop to 111-12, the bottom of their current box.

This reaction does give me a chance to make another box estimate of the tops I expect to see in the bonds in the 121-123 range and in the notes near 116.

The bonds moved up from 113-24 to 118-10, a total of 4 points and 18 ticks. Adding this to the high at 118-10 gives 122-28 as the top of the intermediate term box. The notes moved up from 109-27 to 112-20, a total of 3 points and 25 ticks. Adding this to 112-20 gives an upside projection of 116-13.

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