RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Interest Rates

T-Notes, Bunds Stem Suspected Corrections

Posted 09/23/2019 7:57AM CT | RJO Market Insights

DEC 10-Yr T-NOTES

Fri and overnight’s recovery above Wed’s 129.275 initial counter-trend high confirms a bullish divergence in short-term momentum that defines 13-Sep’s 128.16 low as the end of the decline from 03-Sep’s 132.13 high and Thur’s 129.035 low as the latest smaller-degree corrective low.  It’s premature to conclude at this juncture whether that 128.16 low completed the latest larger-degree correction within the secular bull trend, just its initial A-Wave OR the 1st-Wave of a major peak/reversal-threat environment.  But as a result of today’s resumed strength above last week’s high, it has confirmed at least the intermediate-term trend as up and identified two relatively smaller-degree but key levels from which the risk of a resumed bullish policy can be objectively based and managed.

Former 129.28-area resistance is considered new near-term support.

If there’s further larger-degree bull market correction to go or if a broader peak/reversal is at hand, then this current recovery would be expected to unfold in a labored, 3-wave corrective manner.  A relapse below 129.03 and our new short-term risk parameter will be the first indication of a more bearish count.  Until at least such sub-129.03 weakness is proven, we anticipate at least a more extensive corrective rebuttal to early-Sep’s 132.13 – 128.16 decline or a resumption of the secular bull to new highs above 132.13.  To really threaten a bullish count and reinforce a broader peak/reversal count, the market would need to relapse below 13-Sep’s 128.16 low and key long-term risk parameter.

As he weekly chart below shows that this market has yet to fail below either a prior corrective low or an initial counter-trend low, we believe the magnitude and dominance of the 11-month uptrend that still warrants first approaching setback attempts as mere corrections.  And the more that the past week’s recovery continues, the more important 13-Sep’s 128.16 low will become as a key long-term risk parameter.

In sum, a bullish policy remains advised for long-term players with a failure below 128.16 required to threaten this call enough to warrant its cover.  Shorter-term traders are advised to return to a bullish policy and exposure from 130.00 OB with a failure below 129.03 required to negate this specific call and warrant its cover.

The technical construct and expectations for the German bund market are identical to those detailed above for U.S. T-notes with short- and longer-term bull risk parameters defined at 172.86 and 172.18 shown in the 240-min chart above and daily chart below.  In lieu of weakness below 172.86, we anticipate at least a more extensive corrective rebuttal of early-Sep’s 176.86 – 172.18 decline and possibly a resumption of the secular bull to new highs above 176.86.

Former 173.50-area resistance is considered new near-term support ahead of further gains.

The weekly log active-continuation chart below shows the magnitude and dominance of the 18-MONTH resumed secular bull market where the suspected 4th-Wave correction failed to retrace even a Fibonacci minimum 38.2% of the suspected 3rd-Wave rally from Oct’18’s 157.33 low to 03Sep19’s 179.67 high.  If correct, this count calls for an eventual resumption of this secular bull to at least one more high above 179.67.

These issues considered, a bullish policy remains advised for long-term players with a failure below 172.18 required to threaten this call enough to warrant its cover.  Shorter-term traders are advised to return to a bullish policy and first approach setback attempts to 173.85 OB as corrective buying opportunities with a failure below 172.86 negating this call and warranting its cover.  In lieu of a failure below 172.86, we anticipated further lateral-to-higher prices and possibly accelerated gains.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.