As the market awaits the results of the 30-year bond auction today, let’s notice that the ProShares UltraShort 20+ Year Treasury Bond ETF (TBT) is climbing towards a confrontation with the September-December resistance line, now at 48.25, which if hurdled and sustained should trigger additional strength that tests the prior rally peak at 48.57.

The 48.57 level is important technically because if the TBT’s take out that resistance plateau, the August-December rounded baselike pattern will project an eventual target zone of 53.70-54.20. For that to happen, the bond vigilantes will have to be spooked in a big way -- perhaps by a very disappointing refunding that implies that investors need more premium to continue to loan money to the U.S. Congress, and/or perhaps by more of a realization that the only way to stymie the spending initiatives of the Pelosi-Reid Democrats is via the bond market. After all, Iceland, Dubai, Greece, Spain, Venezuela (next?) are warning investors that profligate deficit spending leads to disaster, no matter what country and regardless of size of the economy and tax base -- especially if recovery is elusive. In any case, today is the final auction of 2009, which ordinarily would produce a relief rally, but not necessarily this year.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.