Friday, April 07, 2006


Here is an updated 15 minute bar chart showing regular hours trading in the June T-bond futures.

In this morning's guesstimate I interpreted the rally from 108-09 to 108-26 after the employment number to be the initial leg up in a bigger rally to 109-08. The market's subsequent action confounded my expectation as you can see in the chart.

However, I think that the 108-00 level is strong support. Moreover, many short term highs and lows occur on the day the employment number is released. Finally, I think I see a volume climax on this chart and such action generally indicates at least a temporary reversal of trend. Typically after such a climax the market will make a slightly lower low (say 107-28 or so) on reduced volume before a big rally resumes.

All in all it looks to me like the bond futures are nearing the start of a rally that will once again take the market above the 109-00 level.

Of course, even if this rally develops I still expect the bond futures to trade near 107 over the next few weeks or months.

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