(TY) Secular T-Note Bull Intact Above Minimum 129.00

By: RJO MRTAugust 17, 2011 10:22am CDT 6889


The trend remains up on virtually every scale in the 10-yr T-Note market with 11-Aug's 129.00 low the latest corrective low and tightest risk parameter this market is now minimally required to fail below to even defer the bull, let alone threaten it. On the heels of early-Aug's impulsive rally, the past week's mere lateral price action detailed in the 240-min chart below is arguably corrective/consolidative ahead of still further gains to new highs above 10-Aug's 130.165 high. 09-Aug's 131.01 high is a rather rogue, intra-hour spasm that we are not recognizing as anything technically relevant.


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The dominance of this year's uptrend is crystal clear in both the daily close-only chart above and weekly chart below. And as is the case with all such trends, the ONLY technical thing that matters at perceived "mature" stages of a trend is momentum, or the market's failure to sustain new gains that might be a sign of tiring that would lead to a reversal. On the smallest of scales mentioned in the 240-min chart above, last Thur's 129.00 corrective low stands out as "a" corrective low, the failure below which would certainly connote "some" weakness. But it'd be crazy to conclude that such a minor-degree mo failure would suffice as an objective signal of a major reversal, as opposed to just another interim corrective dip.

On a scale sufficient to expose a broader reversal, we still believe that a failure below former 124-3/4-to-124.30-area resistance-turned-support is needed to expose a major reversal. And while such a threshold seems and is a wide and impractical distance and risk parameter from current 130.00-area prices, such is the nature of a clear and accelerated bull trend. What we believe will ultimately unfold however will be the definition of some initial counter-trend sell-off attempt- within the context of a broader peaking/reversal process- that will provide a much more practical threshold around which to make a longer-term directional policy change. But as the market has yet to provide any sell-off at all, there's no way to specify such a level and condition currently.


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CQG, Inc. (c) 2014. All rights reserved worldwide. www.cqg.com

Inversely, the trend lower in 10-yr rates is equally clear and dominant, with strength above 11-Aug's 2.34% corrective high minimally needed to expose even an interim hiccup, let alone a reversal threat. And in lieu of such proof of higher rates, the trend lower is intact and should not surprise by further assault on and eventual break of Dec'08's 2.12% low weekly close shown in the weekly log close-only chart below. The daily low close in rates during that period was 2.05% and is also in jeopardy of being broken.

In sum, a bullish policy remains advised for Sep T-Notes with weakness below 129.00 the minimum required to even defer the bull in favor of an interim correction, let alone threaten a reversal. In lieu of such sub-129.00 weakness, further gains to new highs above 130.165 are expected, with the market's upside potential beyond that high indeterminable.


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