Buzz & Banter
The orderly plunge in the Dec. dollar contract continues this morning as it is now trading below the June lows. Succo's excellent overnight message from Mr. Practical touched on the dollar issue as well as bonds. Specifically, Mr. Practical indicated that he wanted to watch very closely bonds for signs that foreign holders would "blink."
Below are a couple of charts; the Dec. 30-year T-Bond contract, and the 10-year yield index (TNX). These charts describe two blink points worth monitoring in the near-term.
For the 30-year futures contract the most obvious blink point is the downtrend line that has been intact since July. A move to 112.25 for the Dec. 30-year would be the first test of this downtrend line since the counter-trend rally in bond futures began in late August. Perhaps that downtrend could serve as one blink point.
On the TNX chart, rates move opposite bond prices remember, we are right now testing trend line support in the 39.50 area. Coincidentally, or not, the downside objective for the TNX based on a technical count of the counter-trend move that began a couple of weeks ago is 39.50. Keep in mind that 39.50 and the trend line mentioned are not firm points on the chart. These are just areas, and especially with bonds, these instruments tend to occasionally overshoot both on the downside and the upside. Just something to keep in mind.
Finally, I wanted to give you a heads up on the indicators I follow. The short-term indicators have been negative since Sep. 24 and now the intermediate Optionable stocks indicator will join the defensive party following today's action. That will put two-thirds of the indicators on defense.
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