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As will be obvious to all long-standing members of this list, this site is
not mine! In some circles they say that size matters - with treasury bonds,
clearly the hyphen matters!
Skirting through all the heavy weight blah blah, it appears that we are
talking long term, EW stuff, and then end up with three possibilities. Not
quite the up, down or sideways, but really quite typical of the fax services
covering their rear ends!
Anyway, at the site with the hyphen you will see no opinions on the market,
just a methodology for creating your own, as the price action reveals
itself, in real time, in front of you!
Best of trading,
Bill Eykyn
www.t-bondtrader.com
"Learn to read the tape"
----- Original Message -----
From: "Tom Godart" <tomgo@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, March 16, 2000 7:03 PM
Subject: [RT] US BOND
> Received this from a friend.
> It is rather lengthly so-- if not interested delete
>
> I have no connection to the site other than as an interested observer.
>
> http://www.tbondtrader.com
>
>
> Contact Me at: sardou@xxxxxxxxxxxxxxx
>
>
>
>
> 3/15/2000 - I think it's a good time to take a look at what we may have
been
> doing in bonds over the past several months and what we might expect going
> forward. In looking at all of my charts a few things begin to come into
> focus. In regards to the bond contract, one possibility of where we may
be
> in a wave count, is that we may have finished an 'impulse' or 'A' wave up
> from the January low at 89-00 on 2/3 at 95-24. From that high we may have
> been in a correction which would eventually lead to a run up in price of
at
> least 4 and perhaps 6 or more points.
>
> A second possibility would have bonds completing a wedge from the January
> lows which could only be a 'C' wave and which would target about 96-12/20
> followed by the return of the bear market with objectives below the
January
> lows.
>
> Price action going forward is the best way to determine which count is
> correct but there are some clues to be looked at which can help us to
> anticipate market behavior and consequently recognize the correct count at
> the earliest possibility. It does appear to me that regardless of what we
> have seen since January, another significant move may be close at hand.
So
> what are the clues?
>
> First of all, if we assume that the more bullish count is correct, then
one
> thing that needs to happen is that we need to overcome a lot of resistance
> rather quickly since a 3rd or 'C' wave should be fast and powerful. The
> bond contract on a front month basis has had major failures at 96-09 last
> November, 96-08 last September, 97-04 last August and 97-26/27 three times
> last July. During the same period of time the cash 30 year has held
yields
> of 5.98/94, 5.85, 5.81 and there is also a Fibonocci retracement target at
> 5.96. The smallest break from these levels was 3 and a half points and
the
> largest was over 7 points so these levels need to be taken very seriously.
>
> The 10 year futures which are currently trading near 96-48, have targeted
> resistance basis the front month at 99-15, 99-32/33, 100-08 and a
> retracement target at 100-14. The cash 10 year has strong resistance put
in
> with the bonds last summer and fall at 5.86, 5.75, 5.73/71 and 5.62 and
it
> is currently trading at 6.24. In the 5 year futures, currently at 97-57,
> there is targeted resistance at 100-14, 100-43, 100-50 and 100-62 with
cash
> resistance from last year at 5.80, 5.61/62, 5.50 and retracement targets
at
> 5.66 and 5.32 and it is currently trading at 6.48. All of these numbers
(in
> the 5 and 10 year maturities) are a long way off but as I have been
> reporting recently, the 5 and the 10 year notes have not yet confirmed to
me
> that the lows have been seen so if we are not about to see these targets
> ahead of us, then we may well be about to go visit the bottom again.
> Actually the 10 year cash is in the process of breaking the bearish
pattern
> but it probably won't be confirmed without a good number tomorrow and some
> follow through from here and the 5 year has a long way to go to get itself
> out of the woods in regards to wave patterns.
>
> Looking at all three maturities together in cash as well as futures, I
think
> there are three possibilities from here which offer great trading
potential
> and there should be ample time to figure which one is correct. Well,
> hopefully there will be ample time.
>
> Count #1 would have us fail in the vicinity of 96-15 in the bond
contract
> in what will be a terminal top followed by a return to, and probably
> through, the lows of January. This count should be characterized by a
> failure in the above mentioned price area followed be a 5 wave decline and
a
> corrective rally which needs to be sold.
> Count #2 would have us pull back towards 93 in the contract to complete
the
> correction which began on 2/3, but probably much more severely in the
> notes. Following this pullback, we could expect a rally which would
> probably only be several weeks off and it would be very strong. If this
is
> the correct count, we might also expect to see a 5 wave decline but it
would
> have much higher targets and it would be confirmed by a 5 wave rally
> following the low.
> Count #3 would have us break out to the upside from right here, probably
> tomorrow on the number, and never look back.
> This last, and most bullish scenario, seems the least likely in that its'
> likelihood is not supported by a wave count in the shorter maturities and
it
> would require the bond to ignore a large amount of very strong resistance
> all within 25 basis points of here. Once above that resistance, however,
> there is clear sailing. This will be the hardest move to catch from here
> unless you are willing to get long and hope, using a good stop which for
now
> would be 95-07 for me. This leaves us with 2 counts which would call for
a
> failure from here and they only differ in terms of where they project us
on
> the down side. One thing that makes the more bearish scenario of new lows
> across the board seem unlikely is the fact that a break that hard in the
> fixed income arena would almost certainly cause problems in the equity
> markets which would in turn tend to support the fixed income markets.
> Given all of this, I am left with a best guess that we are about to begin
a
> move back down to complete a correction. Just where we are headed, I hope
> to figure out with the help of wave analysis but for now I would suspect a
> 92 handle in bonds is not out of the question, nor is a 5 year yield above
> 6.80. I am not recommending a short from right here as the number
tomorrow
> will likely prove me either right or wrong and possibly in a big way. In
> either case I think the move from here can be and likely will be
> substantial, so I am willing to wait until tomorrow to make a
determination.
> Baring an incredible surprise, we shouldn't be anywhere near our targets
> tomorrow regardless of which way we are headed.
>
> A long trade doesn't look too good to me at 95-07, and a short trade gets
> scarry with the contract at 96-28 or cash yields at 5.93.
>
>
>
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