Tuesday, May 23, 2006


Here is an hourly chart showing regular hours trading in the June T-bond futures. I last commented on the bonds here.

I think the market is in the middle of a reaction from yesterday's 107-26 high. I expect this drop to assume a classic three phase shape by the time it ends near support around the 106-08 level.

The bonds made a low at 105-11 in electronic trading on May15. I think that low is going to hold for several weeks as the market rallies into the 110-111 zone. In fact I also believe that the odds are better than even that 105-11 ended the entire drop from the 119-23 high in June 2005 and that 105-11 will turn out to be the low tick of 2006.

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