Daily Spotlight: Interest Rates
A weekly summary of one complex, including daily updates of other developments elsewhere.
[pay]As this post’s title implies, I’m reinstating and expanding my coverage of other markets. Each day will focus on a different complex (the schedule is at the bottom of each post). Soon more coverage within each complex will be added, and Softs will be added on Fridays.
[pay]30-year Treasury Dec (USZ) Wednesday’s lackluster session had failed to extend Tuesday’s rally. Stronger Jobless Claims Thursday started the day weakly by gapping down. A weak 30-year auction was only a formality.
Friday’s dive had gotten ahead of itself, and almost any excuse would be enough to trigger a retest of its low. Closing under 131’22 would have signaled the downleg’s resumption – that’s where Thursday’s open gapped down from Wednesday’s close above 132’00.
The 128’14 target is in-play so long as 131’06 holds tests as resistance. But the decline’s resumption only allows for one test. Although the recent bounce above 131’22 was allowed time to regroup, this leg is different, as is not a reaction to a bigger drop.
Crude Oil Oct (CLV) The growing likelihood for a bigger probe of resistance was fulfilled at Thursday’s open. Its vulnerability to closing negative was fulfilled at the close. There may be a little time and room for a brief morning bounce to retest the $25 area as resistance. But the decline’s resumption should be underway by late morning for optimal credibility.
Natural Gas Nov (NGX) The negative reaction to EIA followed the perfect path for a false break lower to trap shorts and to reverse momentum up. In other words, there’s no excuse not to extend higher without delay. Tuesday and Wednesday’s inside days had made a false break likely. The morning’s dive tested prior lows and yet still managed to close above Friday and Tuesday’s lows. Any early strength Friday would be credible for extending higher.
Dollar Basket Dec (DXZ) Wednesday’s drop was a little too early to resume the decline. Thursday’s bounce takes off some of that pressure. There’s no requirement to extend down into the weekend.
Gold Dec (GCZ) Thursday’s deep drop wasn’t substantial enough to to fulfill the character of resuming the decline at this stage of the pattern. A failed probe of fresh highs, or a second consecutive drop, would signal that sellers were in control.
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Share your questions and comments in this blog post’s Comments section, or during the chartroom’s What’s Next morning market tour, and in the day’s end Markets on Close…
Weekly Spotlight coverage’s schedule is: Currencies (Mon), Metals (Tue), Energies (Wed), Rates (Thu), Softs (Fri, coming).