Bonds Still Rallying

SPX was struggling yesterday, and one of the reasons for that is the ongoing rally in bonds. ZB reached my first bounce target yesterday and broke up through it. My next bounce target is broken support in the 140 area, and with ZB in the 138 area that's still some distance away. I have a decent rally channel for ZB and the next obvious target is to hit channel resistance in the 139'10 area:

EURUSD is still consolidating after breaking up from the IHS. The IHS target is in the 1.356 area and short term support is at the IHS neckline in the 1.328 area, and rising support from the last low in the 1.3235 area. A break of rising support would throw the short term trend and the IHS into question but I'm not expecting that:

I've led with ZB and EURUSD because in the very short term, neither is supporting a move up on SPX here, and yesterday's bearish looking close on SPX could well be a warning of more consolidation this week. On SPX the next obvious upside target is in the 1442 pivot area, and I'm expecting that to be reached, but that doesn't mean that we won't test support more before that happens.  For today I'm watching the 1409 area, as I have potential channel support there as well as the last short term low. If that breaks there is decent support in the 1400 area, and if that breaks then we could see the Friday lows tested:

The 60min SPX chart is looking cautiously bearish short term, with Monday's marginal new high on negative RSI divergence. You can see that a retest of Friday's lows would also be a hit of rising support from November and that should be very strong support. A break below would look correspondingly bearish of course:

I'll close with an interesting long term chart today, and that is the 30 year monthly (LOG) chart of the Nikkei. There are a couple of interesting things about this chart. The first is that the 82-90 bull market, rising some 560% in eight years, was contained within a single narrow rising channel. The second thing is that most of the action since has been contained in a wider 22 year old declining channel, with a short-lived breakout during the 2005-8 bubble. After the recent strong rally the Nikkei is once again testing declining channel resistance, having failed there at the highs in early 2010 and 2011. If it breaks up I have a rising channel target slightly over 12000:

The bulls need to perform today. There have only been four instances so far in 2012 of two consecutive red daily closes, and all of those were during consolidation or retracement periods. Historically the end of March has tended to be weak however. I'm watching the 1409 SPX area for short term support and then 1400 if that breaks. If it does I would expect a test of Friday's lows. On the upside 1442 is the next obvious target and a strong resistance level.