The 30 Year T-Bond futures are recovering from Friday's large selloff that saw new April lows. The strength in the 30 Year futures comes in reaction to the large selloff taking place on Wall Street today.

However, despite the present pop in the 30 Year futures, they have been exhibiting clear behavior of a downtrend. Both near-term and medium-term downtrends are in play, as displayed by our 2nd and 3rd tier downtrend lines. Despite the inherent negativity, the 30 Year futures still have February and March lows to fall back on.

Therefore, a major selloff should be avoided as long as these lows remain intact. We're keeping the massive rally of March 18 in the back of our minds. We were expecting a follow through to the upside, but it hasn't materialized yet.

The downtrend taking control despite the use of quantitative easing raises a red flag concerning the demand at Treasury auctions. The use of quantitative easing is unprecedented in the U. S., so we expect odd behavior from the 30 Year and 10 Year futures over the medium-term.

Therefore, the overall correlation with equities isn't very reliable. However, the recent performance of the 30 Year futures could be displaying a forewarning message as far as the health of the U. S. economy is concerned.

Fundamentally, we find resistances of 127.28, 127.64, 127.89, 128.31, and 128.73. To the downside, we hold our supports of 127.04 126.69, 126.27, and 125.90 with fresh bottom-end of 125.5. The 30 Year T-Bond futures are presently trading at 127 02.5.

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