SEP 10-Yr T-NOTES
In 04-Jun’s Technical Blog we cited the 119.05-area as one around which to be watchful for a bullish divergence in momentum needed to counter the relapse from 30-May’s 121.03 high as part of a broader (bear market) consolidative event from 17-May’s 117.30 low in the now-prompt Sep contract. While yesterday afternoon’s price action was erratic but typical for the moments following Fed policy statements, this morning’s recovery above yesterday morning’s 119.15 minor corrective high confirms a bullish divergence in very short-term momentum. Especially around the (119.05) 61.8% retracement of May’s impulsive, 5-wave rally from 117.30 to 121.03, yesterday’s 118.295 low cannot be ruled out as the end or lower boundary to a B- or 2nd-Wave correction of May’s initial counter-trend rally ahead of further (C- or 3rd-Wave) gains ahead. In this regard we are considering 118.29 as our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.


Traders are reminded that the extent and (5-wave) impulsiveness of late-May’s bullish divergence in momentum above 04-May’s 119.21 corrective high warns that that rally is just the start of a more protracted corrective/consolidative event from 17-May’s 117.30 key low and long-term risk parameter. Against the backdrop of a still-arguable secular bear market shown in the weekly log scale chart below, a more “protracted” correction against this secular bear could come more in terms of TIME than price and be limited to a rebound to “only” the 121-handle and below monstrous former 122-handle-area support that, since broken, is considered a huge new resistance candidate. To truly even defer, let alone threaten what we believe is a new secular bear market in T-note prices that could span a generation, clear, impulsive strength above the 122-handle remains MINIMALLY required. This said, a relapse below our long-term risk parameter at 117.30 is required to reinstate it.

These issues considered, a neutral-to-cautiously-bullish stance remains advised for longer-term players with a failure below 117.30 required to negate this call and re-expose the secular bear. Shorter-term traders with tighter risk profiles are advised to consider cautious bullish exposure from current 119.18-area prices OB with a failure below 118.29 required to negate this call and warrant its cover.