Are bonds headed to 142?

US equity markets have experienced an overnight bounce and the S&P 500 futures are currently trading slightly positive at +.32%. We speculate that there are many bullish fund managers out there that are finding these levels very attractive to buyers.

We also see the 1380 level as the next key support for this market. However, we will be very surprised at this point if the market holds beneath that level for long. U.S. economic data is coming out neutral to positive, and yesterday’s earnings for larger companies were stronger than the recent earnings season trends.

Of course, the pending election may still be keeping money on the “sidelines” waiting for economic-political clarity. We may be in for a very interesting close to 2012. Santa Claus rally anyone? We shall wait and see.

We would like you to focus on the U.S. 30-year bond market today, and look at our chart analysis. We notice a key resistance level of 150 which has held nicely since September. The 30 year made another push to 150 this month but could not hold above that key level.  We also notice a downtrend channel starting in August, which we have indicated by drawing the resistance trend line. You will see an 8-point down-move in September highlighted.

If we see another 8-point down-move from October highs of 150, the 30YR bond futures (DEC 12) will get to the 142 area. This is our first target for a bearish move from these levels.

Our downside pivot is 145’16. If the market breaks this level, we look for 142 to be hit. With U.S. economic activity picking up, and the U.S. stock market near yearly highs, we see a Bond down-move as a distinct possibility.

Click to enlarge.

About the Author
Anthony Lazzara

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.

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