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6 March 06 The Ten Year Note and Thirty Year Bond Terminal Tidal Wave On-The-Edge Growth Fractals The debt market like all asset markets is a cash flow dependent growth and decay process operating in terminal exquisite fractal patterns. Just like the composite equity market with its very distinctive daily fractal pattern along the final edge of the terminal crest of a senescent tidal wave that has been slowing building for 148 years, so too is the long term debt market with its finale last most and topmost along-the-edge fractal activity. Most technicians recognize yesterday's finale exhaustion gap for the long term debt instruments. Buying debt instruments, just as with the buying of all asset classes, transiently becomes saturated and disappears at regular fractal intervals - interest rates then increase, buyers return and reenter the market, and interest rates are driven lower by competition. 26 October 2005 gapped higher and began the final crest for the long term debt instrument tidal wave for TNX and TYX. The deteriorating fractal growth pattern along the endmost crest was/is 16plus/41/33 of probably 33 rather than 33-41. 6 March TNX's and TYX's exhaustion gaps were a good contrarian buy for the long debt instruments. Ideal fractal theory would take interest rates lower for the next 1.5-1.6 times the base of 16-17 days or for the next 24-25 or so trading days, matching the expected devolution of equity valuations. The wobbly fractal growth pattern along the nth stage of the tidal wave's final crest for the equity composites was completed as posted in the previous EF note. The deluge for all asset classes is awaiting in the ante room..... Gary Lammert |