Mid Day Update Thursday - LOOK OUT!

Posted 2007-06-07 11:37
by Karl Denninger

10 Year Bond at 5.08, pinged the 510 level but didn't hold.

This is a gap up bigtime and there is NO SIGN that its over.

The selloff you're seeing now is nothing. Look at last summer for what we may have in front of us if rates continue to head for 525, and given the parabolic behavior of the bond we may not stop at 525!

The high risk trade here is "buy the dips". This looks like a primary trend break although I do not yet have confirmation of that. We do have, however, at present SPX levels, a violation of first-level support in the SPX. This is, on a technical basis, confirmation of a break from the wedge.

Next support level is right at 1500. If we blow through there - which is 1/2% away - then the next level would be the 50, which is at 1488.

Violation of 1500 is sufficient to be considered confirmation of a break below the wedge, although if you want to get technical about it, a close HERE is enough, as first support has been broken. I tend to consider confirmation at SECOND support as verification, but got ahead of it this morning, as the uptick in the 10 on the futures looked good enough to me to make this a very high probability trade.

By the way, go look here guys.....

Ok, so 4 weeks was a bit too long - this time we only got three weeks.

Told 'ya 480 was important.

BTW, the operative word today is SNAP! That sound was the Cat's Jaws snapping shut. Digestion has commenced.

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