Even a stopped clock is right twice a day.Yesterday morning, about a half hour before the 30 year auction results were released, I wrote that I thought Treasury bond futures might be putting in a bottom.Traditionally, Treasuries stage a relief rally after a quarterly refunding finishes up.Concerns about foreign interest had pushed them down, but as the auctions ended up going fairly well, one of the big sources of pressure was taken away.In addition 10 Year T Notes bounced off the 4 percent yield level. (Prices move opposite to yield).
Bonds cleared the first broken support at 112-31 yesterday afternoon; this rally pushed them up to test the next resistance at 114-12.In spite of yesterday’s rally, momentum remained below the zero line (see the bottom panel of the chart) indicating that there could be more upside today.
We have seen follow through buying today. When I started writing this, I was going to write that they were wrestling with the 114-12 resistance; they have traded through it now.A close over 114-12 is bullish. The 10 year T Note yield is approaching support around 3.76%.
Looking ahead, a close up hear will set up a momentum sell short day for Monday. However, I’d be careful with this signal, as MACD is poised for a bullish crossover.On any correction from here, look for 114-12 to be support.
The trend is turning.
Copyright 2009
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