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What is the outlook for T-Notes and Mortgage Rates?

June 13th, 2007 4:21 PM

Hi Mark,

Regarding the 10 year Treasury Notes;
Let me know where you see this yield going in one week, one month, 3 months, 1 year?

Thank you,

Barry Guca
702-303-3909
Liberty Realty               1st Nevada Mortgage
2250 Corporate Circle     1481 W Warm Springs Rd
Ste. 390 Ste. 135
Henderson, NV 89074     Henderson, NV 89014
fax 702-920-8474
www.LasVegasGreatHome.com www.702HomeMortgage.com

I see the gaps for the past 5 days as exhaustion gaps. You can see it traded above the previous high of 5.245 from June 28, 06 but couldn't close above it. I expect a retracement for the next week to month to fill these gaps. I would not expect it to trade below the high of January 26, 07 of 4.906 and would call this support and a buying opportunity for the yield which means a selling opportunity for the bonds. It may possibly trade to 5.307 which is the target generated from the breakout of the high on January 26 before retracing.

Short term target 5.307 followed by a retracement

A few months out 5.583-5.686 after a retracment is complete

Long term target 6.266 based on the pattern of the 5 year chart

Buying points (sell the bond) on the retracement I think will happen (these buy points are based on todays high being the high for the leg. If it goes up a little further in the next few days they will change, but they will still be fairly accurate).

5.084 This will fill a recent gap

4.954 A more likely target. Fills the exhaustion gap.

4.862 Very probable

4.77 Another likely target

4.64

The system I use requires a close below one of these five numbers listed and then a close above using the trading low of the close below as your stop loss. It's acutally more intricate than that, but that's it in a nutshell. I usually don't like to use the high and low targets (5.084 and 4.64) as the three middle targets are the one's most likely to work with this system, but when things are very bullish or bearish sometimes the highest and lowest targets are the ones that get used.

Remember, once a retracement has happend and another leg up has occurred a new set of target number must be generated. Do not use these numbers after a healthy retracement or if we go much more on the upside on this current leg.

Mark

Posted by Barry Guca on June 13th, 2007 4:21 PMPost a Comment (0)