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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (64634)	6/27/2006 1:52:16 PM
From: shades	Respond to of 110194

CHARTING MONEY: And You Thought I Was Bored By Stephen Cox, CMT A Dow Jones Newswires Column NEW YORK (Dow Jones)--The money markets may always be on hold ahead of any policy meeting of the Federal Open Market Committee. Because they seldom trend ahead of these meeting they're obviously up against operative support or resistance levels. But there are technical levels and then there are technical levels. I have the feeling that this week's FOMC announcement may ultimately be more notable than most. That's because quite money markets are generally testing critical levels on the long-term charts. In other words, the ultimate post-FOMC trends may have long-term implications. In the case of Treasurys, no less than a multi-year uptrend in yields may be at stake. This column lately has suggested that the ultimate effect on Treasurys of any meaningful action by the FOMC later this week will be determined by the long bond yield. The technical thought is that the two-, five- and 10-year yields are in uptrends that began in June 2003. Those uptrends will tend to take care of themselves. The odd market is the 30-year, which has yet to establish a similar uptrend by breaking out above 5.295% resistance. The party will be in danger of breaking up until long bond yield joins in. In fact, all yields now are up against turning point resistance, and so are set to move in tandem with the 30-year yield. If the two-year yield trades decisively above 5.271% and so extends its three-year uptrend then it would be targeting 6.144% resistance ultimately, although traders would have to watch for a correction when the yield tested 5.818%. A dip of the two-year below 5.160% might touch off a downtrend to 4.536% support. New highs for the five-year yield would be the signal for a move as high as 5.945%. But a correction, on the other hand, might not stop until the five-year fell to 4.728%. It appears now that the 10-year yield, if it extends its uptrend, may be going for 5.496% initially. In case of a corrective downtrend, charts show a move as low as 4.918%. Readers will recognize that level to be practically the 4.910% number off the monthly chart. The 10-year's move above 4.910% in April confirmed a breakout on the 10-year yield's monthly chart. Dollar Somewhere Between Bullish And Bearish The spot U.S. Dollar Index failed a test of critical 87.04 monthly resistance on Friday. Now, 87.04 isn't just your father's resistance. A move above 87.04 in May 2005 interrupted a nearly three-and-a-half-year bear market and kicked off this year's bull move. Thus, 87.04 is the dividing line between bullish and bearish on the long-term charts. -By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com (Stephen Cox, a chartered market technician, is chief technician for Dow Jones Newswires.) (Data by CSI, Commodity Research Bureau, TradeStation Securities) (END) Dow Jones Newswires June 27, 2006 12:18 ET (16:18 GMT)