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With all the attention on the bond market at present, I thought I'd share
my current take on that market. Attached is an chart with Elliott
labelings. For those unfamiliar with Elliott, Elliott is simply an attempt
to label market pivots in a consistent sequence relying heavily on the
Fibonacci relationships between those pivots.
We are presently in a normal three wave corrective sequence off the recent
lows, labeled A - B - C (A up, B down, C up). C has so far retraced to the
point that it is equal in length to A, a common relationship in three wave
(corrective) moves. Next resistance is at the 115^05 level where C would be
equal to 1.618 times A, and is also just above a .618 retracement of the
next bigger swing down.
Translation: If we move above (especially if we close above) the 115^05
area bonds may have put in a significant bottom and should rally
considerably higher over the intermediate term. If bonds turn down from
here, or reverse sharply from the 115^05 area, we will probably see new
lows before any significant rally.
Regards,
Tom Alexander
Attachment Converted: "c:\eudora\attach\R_bond.GIF"
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