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Daily Commodity Spot: Treasury Bonds Record Worst Week Since June as Investors Pile Into Market Rally


A breakdown of the day's six most active commodity futures.

The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: After Monday's surge to fresh highs, the 30-year Treasury bond reversed down sharply into its worst weekly performance since June. The bond's destination in a "flight to quality" isn't needed during a stock market rally. But is there more to it than that?

1. Dollar Basket
March Contract; DX (UUP, UDN)
Friday's "inside day" started by gapping down. The gap was recovered entirely, but held as resistance through the close. The "ineffectual pessimism" still keeps alive greater potential for rallying out of the current consolidation.

2. Eurodollar
March Contract; EC (FXE)
Friday's "inside day" started by gapping up. The gap was recovered entirely, but held as support through the close. The "ineffectual optimism" still keeps alive greater potential for declining out of the current consolidation.

3. Gold
Febuary Contract; GC (GLD)
Thursday's break under 1610.50 was not rejected at Friday's open. The setup wasn't confirmed Friday by a second consecutive lower close. Fresh lows under 1600.00 to 1575.50 would still be credible, but less so if not begun almost immediately after Christmas by dropping dramatically.

4. Silver
March Contract; SI (SLV)
Friday's low-volume "inside day" conspicuously avoided probing under Thursday's 29.00 low, or recovering. The delay should end after the weekend and resume the drop next targeting 27.90.

5. 30-year Treasury
March Contract; US (TLT)
Wednesday and Thursday's steep drop extended sharply lower Friday, too. Monday's 1-point rally to 146-08 was reversed to 141-28. Like S&Ps, bonds have returned to levels last seen about two weeks earlier. Could there be more at work than just an inverse correlation between the two markets? We'll find out very soon, if bonds should continue falling while S&Ps reverse back down, too. Then Europe's sovereignty risks will be applied to US Treasuries.

6. Crude Oil
March Contract; CL (USO)
Thursday's headlines about crude visiting $100 made the rally vulnerable to a near-term correction. Yet Thursday's 100.15 highs were probed up to 100.38 Friday. But only briefly, as the headline-headwind pushed the price back down under 100.00. Nevertheless, the rally's momentum remains intact so long as 97.00-97.40 can hold pullbacks as support.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
No positions in stocks mentioned.
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