Still Fishin’…

A two-day surge pushed rates on the Ten-Year past three prior peaks, two of them daunting ‘externals’.  This amounts to a quite powerful impulse leg, presumably with enough power to challenge the 4.69% high recorded in mid-May.  The usual idiots will debate how many Fed governors can dance on the edge of a cow patty, but that won’t alter the fact the market forces are putting significant upward pressure on Treasury yields.  The short-term technical picture suggests they will reach a minimum 4.73% over the next 2-3 weeks, but 4.82% is possible,

Last week’s strong two-day rally generated a lot of bullish talk, but from a Hidden Pivot standpoint it merely triggered an enticing ‘mechanical’ short at the green line (=73.44). The position was theoretically profitable when the week ended, since the futures were trading $2 below the entry point and nearly $7 from the 78.15 stop-loss.  There are no guarantees the downtrend will reach D=59.35, since sellers have still yet to decisively penetrate the midpoint support (p=68.75). But the hypothetical trade looks likely to produce a profit with a dip to at least p, or even p2=64.05.

Yields on the Ten-Year Note ended the week just beneath a Hidden Pivot resistance at 4.49%, but the damage had already been done with the slight penetration of the resistance earlier in the session. If the rate had settled above it for a second consecutive day, I’d have shortened the odds of a further run-up to the 4.75% target to even money. As things stand, I’ll use a voodoo # at 4.62% as a minimum upside target for the near term. We’ll be better able to assess the odds of new highs at that time.