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This is pretty much the final straw for me in arguing against the rally. Until now Treasuries have not sold off. However as the chart above clearly shows prices for the 7-10 year area of the market have fallen through support levels established from the consolidation pattern. Now the only technical indicator holding prices up is the 200 day SMA which is also the line between bull and bear markets. Finally, note that the SMAs are starting to form a bearish picture -- prices are below all the SMAs, the shorter SMAs are below the longer SMAs and all the SMAs are moving lower. This at a time when the Fed is buying Treasuries to prop up the market. That's pretty impressive.
I should add -- I still don't see the fundamental reason for this rally in stocks and sell-off in the bond market. There are still plenty of negative issues that have to be dealt with. But this is also a situation where you look at the chart in front of you, put blinders on and then continue trading.
