What a turn around yesterday! We have hammered home the exacerbated feel of this sell-off all week with the blatant negativity being a true upside catalyst. The S&P is now 100 points from yesterday’s session low and traders did not need to pick a bottom, there were many opportunities to get long as the day unfolded.
Yesterday’s late day rebound has vanished and a full-blown trade war has taken the S&P 500 down as much as 2%. China retaliated to U.S tariffs by announcing it would impose 25% of such upon 106 U.S. products including soybeans, automobiles, planes, chemicals and more totaling $50 billion. Crude Oil is down about 2%, soybeans nearly 5% and Boeing 6%.
Monday the USH should trade between possibly 150-24/20 and at least 152-03. If the upper level is broken the USH should test 152-25/28. If the lower level is broken the USH should test 150-08 or 150-00. The 10-year struggled to move higher (see last week Monday’s report) as the Note finished the week testing and holding above my lower weekly boundary projection at 124-20 (Dec contract).
Looking at the 10-Year U.S. Treasury Notes, 4-hour chart, the market fell with five waves from 134.37 with overlaps between waves four and two, which is fine as long it has a shape of a diagonal triangle.
For the past 6-weeks the Treasury market has slowly ground lower posting lower weekly highs and lower weekly lows; Last week the 10-year traded in a neutral range as the Note successfully ground higher pre-Employment and posted a new high Friday.
On Friday, Aug. 19, the 30-Year Treasury Bond finished the week going out near its weekly low as the market rejected my call for a recovery; The 10-year Treasury Note finished the week re-testing its weekly low and my minimum lower weekly boundary projection at 131-26/24.
Last week the 30-year Treasury Bond completely erased the previous week’s gains as the USU posted an inconclusive inside week down; the 10-year Treasury Note finished the week posting and settling on its new weekly low as the note posted an inconclusive inside week down pattern and recovered...