Eye On Today's Treasury Auction

Good Thursday Morning, MPTraders!  February 8, 2024-- Pre-Market Update: The Elephant in the Room today is the LARGE $25 billion 30-year Treasury Bond Auction (Results at 1 PM ET), which typically is less well-received than the 10-year Treasury note auction. Yesterday's $42 billion auction of 10-year notes received a strong reception, coming in at 4.093% compared to where it was trading just before the auction, at 4.105%, which was translated as stronger demand than expected.

That said, however, the bond market as represented by the TLTs (20+ Year T-bond ETF) barely acknowledged the supposedly well-received auction of a whopping $42 billion of 10-year T-notes yesterday afternoon, which indicates to me that the TLT is vulnerable to retesting the 1/24/24 corrective low at 93.10. My attached 4-Hour Chart setup argues that any forthcoming weakness MUST BE CONTAINED above 91.25 to preserve the integrity of the 6-month accumulation pattern that calls for lower longer-term rates during the next 1 to 3 months. 

A sustained breach of 91.25 will put such a scenario in doubt, and as such, will get the attention of the equity markets. Given the relentless post-October upmove in ES that has been impervious to just about everything thrown at it-- including Fed Chairman Powell's hawkish, higher-for-longer comments recently-- the index could be increasingly sensitive to the next negative macro headline, such as a poorly received 30-year T-bond auction. Last in TLT is 94.04...

That said, my attached Big Picture Chart of ES shows a very powerful uptrend pattern that will remain intact and dominant unless and until a bout of weakness slices beneath 4965 for starters, but thereafter, will need to follow through to the downside beneath 4900 to inflict serious technical damage to the post-October advance. In the absence of such weakness, ES points still higher, into the 5050/60 area next... Last is 5007.25