The yield on the 10-year T-note hit a reaction low of 4.49% this morning, down from 4.96 on 1/26. What next? Let's take a look at the iShares Lehman 20-Year Bond ETF (TLT).

The big question is whether or not Tuesday’s spike to 91.28 (during the “mini-crash” in the equity markets) represented the end of the upleg off of the 1/29 low at 86.60. Although I can make a case that my near-term work points a bit lower, my intermediate-term work is so constructive that I have to expect the TLTs to pull back and consolidate above 89 in the upcoming hours ahead of another upleg that will confront and hurdle the December high – on the way to 94-95 thereafter.

Why? A confluence of forces could be at work – weakening U.S. economy, flight to safety considerations in a deteriorating equity environment, and ongoing credit risks (subprime disease) – all could be impacting the Treasuries.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.