(10-21-12) ... But Has It Gone?

We had warned of a severe oversold condition in the Dec. Long Bond contract. We had been consistently buying the contract on our standing orders at 146.06.

Indeed in Thursday overnight trade, we bought the Bonds again at 146.06, selling them on Friday's close at 147.18.

We had warned of a severe oversold condition in the Treasury Bonds that began to be corrected in Friday's trade. However Bonds are still cheap.

If the Spoos are able to continue their downward slide in Monday action, which we suspect they will, then we would expect the Bonds to pick up another point in Monday's trade.

The Dollar index, which we had been consistently buying in the 78.80 area, continued to pick up steam Friday, as the Dec. Euros backed off from their 1.3150 recent highs, a high we had been short at and continue to be short. We expect that the Euros in Sunday night trade will come down for a test of 1.30 in the cash contract.

The Nov.