The extent of the past three days’ break reinforces our bearish count introduced in 16-Apr’s Technical Blog following that day’s bearish divergence in momentum below 05-Apr’s 158.89 low. This continued price erosion highlights 28-Mar’s 159.69 high as one of developing importance and, we believe, either the END or upper boundary of a major BEAR MARKET correction. In this regard that 159.69 high is considered our new long-term risk parameter from which a resumed bearish policy and exposure can be objectively based and managed ahead of what we suspect is a resumption of the secular bear market that preceded Feb-Mar’s recovery attempt.

From a shorter-term perspective former (suspected 1st-Wave low) support from the 158.89 level would be expected to hold as new near-term resistance ahead of further losses, so we’re identifying this level as our new short-term bear risk parameter for shorter-term traders with tighter risk profiles. A recovery above 158.89 would jeopardize the impulsive integrity of a more immediate bearish count, raise the odds that the decline from 159.69 is a 3-wave and thus corrective affair and re-exoise the past couple months’ recovery.

While Feb-Mar’s recovery is not unimpressive, against the backdrop of a year-and-a-half’s downtrend on a weekly log scale basis below it falls well within the bounds of a mere corrective hiccup thus far. And if correct, such a count would call for a resumption of what we believe is a new secular bear market in bund prices that could span a generation. This count is consistent with our long-term bearish count in U.S. Treasuries.

These issues considered, a bearish policy and exposure remain advised with a recovery above at least 158.89 and preferably 159.69 required to threaten and negate this call. In lieu of such strength we anticipate further lateral-to-lower prices and an eventual acceleration of this decline.