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Long Bond's Spike Up May Be Short-Lived


The optimistic reaction forgot to first form an accumulative bottom.

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: The long bond had fulfilled its minimum downside objective Thursday. That enabled a bounce in reaction to Friday's Employment Situation Report. But this is probably not a durable bounce, which is why so much of the reaction was returned before the weekend. Meanwhile crude oil is retesting the rally's target and deciding whether to extend or to collapse.

Dollar Basket
Reacting down to Friday's Employment Situation Report tested Thursday's 82.10 low, which must hold as support to maintain the rally's momentum.

Sep Contract EC; (NYSEARCA:FXE)
Friday's overnight retest of Thursday's 1.3110 low reacted up on the Employment Situation Report. But it is only a corrective bounce if 1.3205 is not also recovered.

Dec Contract GC; (NYSEARCA:GLD)
Lower lows overnight were blindsided by Friday's Employment Situation Report. The reaction triggered a gap up above 1681.00. Its recovery through Friday's close would have signaled momentum reversing up. Gapping up above it Friday is a proxy for at least having recovered 1677.00 to signal the decline is done, with upside objectives at 1410.00 and higher now in play.

Dec Contract SI; (NYSEARCA:SLV)
Flat-to-lower ranging overnight responded well to the Employment Situation Report, surging through the 23.55-23.75 buy signal and gapping up Friday above it. The island's gap back up to 24.40 and high is now in play.

30-year Treasury
Dec Contract US; (NYSEARCA:TLT)
Fresh lows overnight down to 128-12 retested the three-week old overnight low before the Employment Situation report triggered a spike up to 130-01. Having greeted the report from weakness, the reaction up is likely just from being being oversold. In fact, the spike was retraced to its 129-04 pullback limit. Closing any lower would signal the decline had resumed, next targeting 127-04.

Crude Oil
Oct Contract CL; (NYSEARCA:USO)
Thursday's close above 180.75 extended higher Friday to fulfill the minimum 110.65 target. Fresh highs above 112.25 are possible as long as 109.75 were to hold as support.

Natural Gas
Friday extended Thursday's dip back under 3.57, but without gaining momentum. Any initial strength Monday would again be likely to extend higher intraday.

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.
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