US 30YR Bond Futures Could Head to 142

US equity markets have experienced an overnight bounce and the SP 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 buy. 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. US 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 econo-political clarity. We may be in for a very interesting close to 2012. Santa Claus rally anyone? We shall wait and see.

We really would like you to focus on the US 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 YR 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 US economic activity picking up, and the US stock market near yearly highs, we see a Bond down-move as a distinct possibility.