Our proxy for longer term interest rates, the TLT's, is alerting us to a potent forthcoming decline in rates.  The TLT's pivoted to the upside yesterday, and continued higher today to test its 5-month resistance line at 92.25, in what looks to me to be the initiation of a new upleg off of the November low at 87.86, which projects to 94.00-94.50 next.  Regardless of the sense that today's strength is associated with flight-to-quality buying in U.S. Treasuries in reaction to heightened tension between Iran and the West, my technical analysis work has turned up strongly, indicating that the intermediate-term trend in longer-term rates is on the verge of downside acceleration.

MJP 01/12/06