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T-Bond Commentary for Monday, September 11, 2000

US T-Bonds  Dec  USZ0

Pattern Signals - an automated pattern identification process which
identifies today's most likely market scenario based on recent price behavior.

NR7 with an Inside Day Signal
This signal indicates that range expansion is highly likely.
If, during the day, yesterday's high of 100-09 is exceeded then either buy the
breakout (aggressive) or buy the retracement to the breakout (conservative).
If, during the day, yesterday's low of 99-29 is exceeded then either sell the
breakout (aggressive) or sell the retracement to the breakout (conservative).

2 Day ROC Buy


Pivot System Support & Resistance Levels - commonly used by floor professionals to determine
relative value based on prior day price activity. Shifts in market psychology often occur near these levels.

R2  100-16     R1  100-11     DP  100-04     S1  99-31     S2  99-24

Range Projections - This market will have a tendency to trade within the Normal
High/Low Range today as noted below. If those levels are exceeded, use the Extended Range.

	Normal	Extended
High	100-12	100-17
Low	100-00	99-27

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TODAY'S T-BOND COMMENTARY

We have two Pattern Signals fired for today's trading, the first of which is actually a combination signal. The NR7 with an Inside Day signal is telling us that Friday's trading range was the narrowest of the last seven days. The Inside Day part of the signal refers to the fact that the trading range was within the range of the prior day. If the market were thought of as a spring gradually being compressed, these signals represent a likely trigger point for releasing that pressure. There is potential for the market to break out of this tight range today, and essentially trend in one primary direction. A good clue as to if and which direction it might break can be determined by today's market action near Friday's 100-09 high and 99-29 low levels. A break of either is a likely indication of the new trend direction out of this contraction period. An aggressive trader can enter on the breakout. The more conservative might want to wait until a return to the breakout level, which often happens before a sustained move begins.

Some initial clues to breakout direction can often come from early rejections of these levels. If the high is approached, repelled, and price then moves through the DP, the likely breakout direction is the low. Likewise, if the low is approached, repelled, and price goes through the DP from below, the likely breakout direction is the high. Another clue can often be found in price action near the DP. If price is unable to move through this level, the likely breakout direction will be the same side as it originated.

The second signal fired for today is the 2 Day ROC Buy. This signal is the Raschke and Connors way of quantifying the swing trading methods as taught by the Taylor Trading Technique. This technique teaches that there is a natural pattern to the sequence of buy and sell days. The 2 Day ROC Buy signal is telling us to expect today to be the "buy day" part of that pattern.

On the T-Bond Half Day Chart, the 5 period Double Stoch has turned higher from oversold levels while the 10 period Double Stoch has moved slightly lower. Of greatest significance is the upturn in the 7 period %K. A turn of this indicator from its overbought or oversold zone is usually a good indication that a new trend has begun and at least several more bars of new short term direction should follow.

ADX levels for all of the timeframes that we normally monitor (5, 15, 30, 60, and 120) have values less than 18, which tells us to keep an eye out for any developing triangles, wedges, flags, or channels in these timeframes. We can use a breakout from any of these patterns as either a trigger into a trade or to help determine directional bias

Although the 2 Day ROC Buy signal is hinting at further upside activity, the NR7/Inside Day signal will be the real key to today's trading. Whenever this pattern combination fires we can go into the trading day with two key pieces of information at our side. 1) We know that in all likelihood, price activity should essentially trend in one primary direction. And (2) clues to the direction of a potential trend day breakout are often determined by price action relative to the prior day's high and low, and to today's DP as described above.

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