"Nothing changes people's opinions about the world like price." Me
A month ago we warned that 2 seemingly independent patterns had emerged that would correlate to a difficult counter trend move. The first was the "Mother of all bullish RSI divergences" on the Yen futures contract in the March 8-11 low window. The second was the large roll gap in Treasury futures produced by the Employment Report and the switch to June contracts.
The large speculative short in Yen futures did not hastily run for the exits as the focus shifted, however. The Yen has clawed its way up 400 pips from the 3-12 low. The Notes and Bonds gapped higher with Cypress but then chopped sideways for 7 sessions before breaking out and up again as the month closed. Another 6/32 above Thursday's high would close the gap for 10s and Bonds fulfilled their destiny this morning.
We believe these moves were fated to occur prior to the confiscation of deposits in Cyprus and the adolescent foot stomping of celebrity whoring North Korean leaders. This website is testimony to that belief. It is the journey that tests one's faith, not the destination and this trip proved difficult. More importantly, what of April and the annual dance of the Bears around the May pole? A settle above 132-04 in the Dime this Friday would be the first above the 20 week in 2013. A boost toward 133.15 would see the market unchanged from May 2012. Those still attempting to reverse engineer a macro narrative from the price action increasingly look like Sybil at a speed dating convention.
We remain in the secular bear camp for bonds we laid out last Spring. Tops are - by definition - long drawn out affairs. Secular shifts that take a page in a history book can be years to live through. As Livermore noted, the prices one could acquire in bear markets can be surprising. Be wary of those whose understanding of the Universe is the net change over a minor time frame.