Posted on Oct 17, 2023, 07:48 by Dave Toth
DEC 10-Yr T-NOTES
This week’s continued weakness following Thur’s confirmed bearish divergence in short-term momentum below 10-Oct’s 107.105 corrective low and short-term risk parameter confirms last week’s 108.16 high as the end of what we believe is a 3-wave recovery from 04-Oct’s 106.035 low as labeled in the 240-min chart below. Left unaltered by a recovery above 108.16, this 3-wave bounce is considered a corrective/consolidative affair that warns of a resumption of the secular bear market to eventual new lows below 106.035. Per such, this 108.16 level serves as our new short-term parameter from which a resumed bearish policy and exposure can be objectively rebased and managed by shorter-term traders with tighter risk profiles.
On a broader scale, the daily (above) and weekly (below) charts show the magnitude of the secular bear market that should hardly surprise by its continuance. While short-term strength above 108.16 could be the start of a more protracted correction or reversal higher, to break even the portion of the major bear market from 06-Apr’s 116.30 high, commensurately larger-degree strength above 01-Sep’s 111.125 larger-degree corrective high and key long-term bear risk parameter remains required.
In sum, a bearish policy and exposure remain advised with a recovery above 108.16 minimally required to defer or threaten this call and warrant a move to the sidelines by shorter-term traders and pared exposure by longer-term institutional players. in lieu of such strength, we anticipate a resumption of the secular bear trend to at least one more round of new lows below 106.03.
DEC GERMAN BUNDS
Similarly, overnight’s break below Thur’s 128.76 initial counter-trend low confirms a bearish divergence in short-term momentum in the Dec bund that marks Thur’s 130.20 high as the END of the recovery from 04-Oct’s 126.62 low. Especially given the market’s acknowledgment of the 130-handle-area as a key new resistance candidate, we’re defining 130.20 as our new mini but key parameter from which the risk of a resumed bearish policy and exposure by shorter-term traders can be objectively rebased and managed following 09-Oct’s bullish divergence in short-term mo that warranted neutralizing bearish exposure.
The daily chart above shows the former and key support around the 130-handle-area that, since demolished in Sep would/should be expected to hold as new key resistance. Thus far this role has been played well, re-exposing the secular bear trend shown in the weekly chart below. Commensurately larger-degree strength above 01-Se’s 133.34 larger-degree corrective high and key long-term bear risk parameter remains required to break even the portion of the secular bear from Mar’s 140.30 high.
In sum, a bearish policy remains advised for longer-term players with a recovery above 130.20 required to pare exposure to more conservative levels and subsequent strength above 133.34 required to neutralize remaining exposure and reverse into a new bullish policy. Shorter-term traders whipsawed out of bearish exposure following 09-Oct’s bullish divergence in short-term mo are advised to return to a bearish stance with a recovery above 130.20 negating this call and warranting it cover. In lieu of such 130.20+ strength, we anticipate a resumption of the secular bear trend to new lows below 126.62.
