The upward momentum in the 30-Year is regaining traction as U. S. equities plummet in reaction to the bad news concerning the auto makers and banks. Investors are running to the Dollar and U. S. debt for safety as the outlooks for the EU and Britain darken.

Furthermore, China is losing a little bit of its swagger since a deteriorating global economy will undoubtedly have a negative impact on its economy.

Additionally, we can't forget the Federal Reserve is officially participating in quantitative easing, meaning the U. S. government will protect the interest payments of U. S. debt at all costs. Hence, the 30 Year futures are strengthening in the hope that the excess supply of U. S.

The S&P futures have crashed below our 3rd tier downtrend line and are presently trading beneath the highly psychological 800 level. The S&P futures are flirting with dangerous territory in reaction to the government's rejection of the automakers' restricting proposals.

The viability of GM and Chrysler are thrown into doubt and the possibility of bankruptcy is all the more likely. Furthermore, if GM and Chrysler are allowed to fail, then the market may force Ford to follow suit in what could be an industrial collapse. The inevitable can't be delayed too much longer.

Rate fails at support and clears large stops under 1.3200; rate likely has stops building in both directions but shorts have taken control of the market as the rate gives back gains over the 1.3400 area last week late.

Action remains two-way; stops under 1.3150 area said to be building in size suggesting the rate has another leg lower coming near-term. That dip would be a buy opportunity in my view. Overhead resistance of 1.3350 area now back in play; expect sellers in that area on a rally.

Rate falls through stops into support around the 1.4100 handle overnight; traders report more stops waiting under 1.1400 with bids around 1.4050 for the day. Bulls need to be on the sidelines at this point. A close back under the 1.4250 area argues for more losses.

Traders report large names on the dips last week but they may have been whipsawed out to start this week. Overhead resistance now drops to 1.4380 to 1.4440 area; overhead target of the 1.5000 area likely to be on hold with a test of the lows first possibly creating a range.

The USD firmed up overnight as follow-on selling found stops in the majors. Overnight news that Spain will offer its first bailout during the current financial crisis pushed EURO into stops under the 1.3200 area and below keeping the rate under pressure throughout the evening. Bids ahead of 1.3150 offered initial support but traders note more stops under the 1.3150 area are building. High prints in Asia at 1.3287 were offered by a US bank traders say. Adding weight are lower equities; markets reacting to news that the US government will not support the current plans by GM and Chrysler and may be looking for a bankruptcy.

The USD/JPY continues its struggle with our 3rd tier downtrend line as it tries to ascend past key February highs. The next 24 hours are crucial for the USD/JPY. For if the currency pair can climb past February highs then we will finally see a retest of 100 with the possibility of large near-term gains.

On the other hand, if the USD/JPY can't brave through February highs within this time frame, we could very well see the currency collapse back into its downtrend with a movement towards our near-term uptrend line.

With key economic data coming from both Japan and the U. S. in the next 24 hours, the USD/JPY will certainly have the fuel to ignite a fundamental movement in either direction.