Bonds on the run - when will their low be done? Some views

US Treasury bonds and notes continued their run downward although there are news reports that they held up rather well, considering the amount of new supply - especially 2-year notes. The symmetry targets I've hypothesized for their cyclic lows seem to remain in play, so let's see how they are doing. Below are charts of the TLT, USB (30-year bond) and UST (10-year note). The first chart below is TLT which is technically the most interesting. Its symmetry target is $86.28, but that would place it below the prior swing low chart support between $90 and $91 (unlike UST and USB as we'll see). Volume seems to be picking up as it fell to just above $92 today, which may indicate some capitulation on the way. The indicators continue to look bad, which is consistent with the expected drop of course; except that standard RSI and StochRSI are showing some positive divergence. It will be interesting to see whether TLT makes it all the way to symmetry target, or gets chart support from the swing lows, if and when USB and UST get to symmetry targets as they still seem to be on track toward.

Next is USB charting the 30-year Treasury bond - its symmetry target is $115.79 which is above its comparable level of the swing lows of October and November, 2008. Today it fell to $118.66. Not much positive divergence in this one - only a slight hint in the MACD although that crossed down again, and the standard RSI remains above 30 (at 31.12). Assuming it drops a few more dollars, it will need to pull up to show that the pullback was somewhat orderly. I read it as being in or finishing a small 3rd wave on the drop from $123.56, so it should start showing signs of a small 4th and then 5th wave into $115.79.

The 10-year note, $UST hadn't updated yet in Stockcharts.com in time for me to post this, that's why its chart shows the 5/22/09 date and not today's drop. Its symmetry target is 116.88. I included under the UST chart, a chart of TNX, the 10-year note's yield. For what it's worth - which definitely may be something - a symmetry C=A target for the yield (assuming it's a simple ABC with symmetry) is at 34.80 (i.e., 3.48%) which it did reach today. So it will be interesting to see where the 10-year note goes from here.

I also included a chart of the 2-year note's yield at bottom. It "held steady" at 0.90 today - notice that its 200-day moving average is still declining, so it remains technically possible for the 2-year note to decline in yield and rise in price, testing or exceeding the December 2008 extremes. Maybe it seems unlikely, but then again, if a 2-year Treasury note can be a proxy for the dollar, then maybe it can happen if the dollar's also strengthening. The dollar moved higher today, even though it closed with little strength, so it retains the possibility of finding support at this key area (as discussed in a post over the weekend here).