Who's to say if the next correction will be like the last correction which lasted all of 1.5 days before bonds got blasted again?  But even the biggest corrections must start with appallingly short, tenuous corrections.  When we have those appallingly short, tenuous corrections, technical studies move into a position where they're "ready" for happier times. 

That's neither here nor there though.  Technical studies that apply some sort of math to trading levels will always be able to make a case for just about anything.  Naturally, when we have a green day following a bunch of red days, some technical study will deliver the Sherlock-like conclusion about the "potential for a reversal."  In defense of technical studies though, it's not always as simple as my crude example above.  It really does count for something that we have those 3 little green days amid the sea of red that's been in place since late April (note: the 4th day of green is today's early overnight trading). 

There are other forms of technical analysis that don't rely on math whatsoever.  These are interesting in their capacity to reliably comment on certain likelihoods.  Japanese candlesticks are one of the more mainstream technicals in this category.  In truth, candlesticks are just another way to plot market movement and have no technical merit in and of themselves.  But because they show us the open/high/low/close for each day of trading and because they do so with more visual contrast than the standard bar chart, they allow for good pattern recognition. 

While there are entire books written on analyzing every nook and cranny of candlestick patterns, some of the most basic formations end up being the most reliable.  In the chart below, notice the long thin lines (called "upper shadows") extending from the green candles. 

In short, this simply tells us that bonds traded much higher in yield on these days, but buyers were able to battle back to positive closing levels.  That's as simple as it sounds.  If you're thinking that maybe this means we've reached a general area in rates where buyers are less interested in capitulating (rolling with the negative punches), that's a pretty fair assumption.  It's very important to note that the past examples where this observation fails happen to be some of the ugliest sell-offs in history.  This is why we discussed the possibility of 2015 ending up like 2013 yesterday.  We hope not to see that, but it's always an outside risk.

For now, if we continue to muddle about without losing too much more ground, the sense of a defensive perimeter here will increasingly materialize.  To whatever extent domestic data will inform the momentum (and it could be very little), today's focus is on Retail Sales at 8:30am.  The afternoon's focus is on the 10yr auction, but there too, the reaction could be inconsequential or surprisingly big.