Why I’m Long the 10 Year Note…for now.


I have been long the 10 year note since 8/13/2009 at 115.625.  Although this signal was based on technical analysis, I do believe that some fundamental elements support the continued rise in the note (a lowering of interest rates). Since the 10 year note is the key rate for mortgages, the Fed and the banks have a vested interest in keeping this rate low. The real estate market is in a precarious position and any significant rise in interest rates would snuff out any short-term recovery.  The second reason I believe rates will fall is because the stock market rally looks tired and likely to correct relatively soon, at least for the short term. Investors are still risk adverse and I believe they are likely to run to bonds when the market begins to correct. That should send rates down for a while.  Of course, all of this fundamental basis is really not important to me, just good talking points.  Technically, I am looking for the following as continued confirmation of the uptrend:


          the 8/24 low of 115.359 holds and ideally the low of 9/9 at 116.563

          the trend line connecting the 8/07 to 9/09 lows remains intact.

          resistence at 118.70 is decisively broken accompanied with an increase in volume.


For now, I simply wait and watch.