The positive momentum discussed this morning continued into the noon hour as 10 yr notes ventured as low as 2.8.  Meanwhile, MBS flirted with the 102-00 level in 4.0's.  But over the last hour we're seeing signs that the rally will have to prove that it's ready to stick around.  First, recall the 10yr chart and discussion from this morning where we broke the last 2 days of 10yr note movement down into two different descending ranges:

With that chart in mind in conjunction with my assertion of a "possible test of today's rally," the most likely candidate for a test  would be whether or not yields will stay in the lower of those two moving ranges.  In the following chart, we can see that playing out.  I also added some horizontal lines that either have or might act as early indicators that tests of more significant ranges are coming.  Those horizontal lines are just standard issue short-term pivots that connect as many highs and lows as possible.

The coincidence of yields meeting both the horizontal and sloped line reinforces the orderly and purposeful nature of the last hour of weakness.  In other words, it's not necessarily anything upon which to base any action.  Of course, it COULD turn out to be!  But that would require a violation of the middle trendline or another pertinent technical signal from one of the other markets.  Speaking of those, here's how futures are faring by comparison.

A similar approach of the horizontal line there, but a bit of a discrepancy with the small violation of the sloped line.  Given the imprecise art of placing sloped channel lines in conjunction with the relatively small breakout, I'd probably not consider the uptrend in prices broken yet.  But the potential for that to occur is the reason you're hearing from me after all... So be alert.

Finally, the MBS chart:

Nice horizontal level at 101-27 for MBS.  With one small exception, we've seen it provide support to falling prices in the past hour.  It wouldn't be unlikely to see some more push and pull around that level before the market decides on it's afternoon direction.  Whatever the case, after the past few days, it's nice to see some truly orderly movement within ranges from the bond market.  A firm break lower means we "keep looking" for a logical band of prices/yields to act as the base of support.  But a strong showing here is another vote to solidify yesterday's double bottom in 10yr note yields as that base. 

Stay tuned, I'll be back to let you know how this test shakes out.