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Monday, February 9, 2015

Monday Market Update -- Treasuries Suggest "Something Is Up"

Friday was an ugly day in US treasuries, and the question is: what will it mean, if anything, for this week. Greek tragedy continues, but at this point, it's not really news anymore.

ES Futures:
Down hard but the chart doesn't look as scary as one would expect and may even suggest a rally.

The US dollar looks like it may have rested enough for another attempt at new rally highs, but 95.01 is still key.

Maybe all that Globex volume over the past weeks did mean something. On Friday, 5s, 10s, and 30s each broke their Jan 22nd swing points to the down side and did so with volume. Their far more important levels are the Dec. 24th lows in each, but Friday was a big heads up. 5s in particular broke with big volume which is notable because yields in 5s have been showing relative strength for well over a year -- suggesting "something is up." Like shorter-term rates. Like an inverted yield curve.

NG gapped higher overnight. Crude is gunning for new rally highs, and could be setting up a 1:1 Fib extension to the 58 area.

Gold broke 1239 on Friday, casting doubts on the impulsive nature of the rally. Because gold is likely in an Elliott b-wave, it should be expected to rally in a sloppy fashion, but it could also be sending a signal that people prefer dollars because of debt deflation (which puts a bid under the dollar), which suggest lower prices.

S&P Outlook:
ES futures don't look as scary on the chart as they do nominally, but Friday was a poor close for the markets and could set up a rough week.

The S&P got above the 78.6% Fib retracement and closed below it, suggesting sellers acting at a key level as treasuries faltered. Keeping above 2036.72 could keep enough pressure on to reach a slightly higher rally high, but it doesn't feel like a high odds trade. A/Ds and ticks were terrible on Friday, and TRIN is in the wrong place (in the Red/Sell Zone).

Being a Monday, it wouldn't hurt to let the market settle in and see how things look in the afternoon. Especially treasuries (which are bouncing).

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