On Friday morning (May 29) in our special note, we had warned of potentially excessive and severe volatility in Friday's session -- during the so-called Last Day of May Trade phenomenon.

We warned that the Shills would keep their powder dry until the end of the day and try to drive equity prices higher, which is precisely what happened in the final five minutes of trade.

We also warned early on of a potential short squeeze coming in the Treasury Long Bond contracts, which is precisely what happened, in that Thursday night's pronouncements by the Fed that made the Fed seem incompetent were actually a positive for the Bonds, when the Fed said it would not attempt to target rates.

We had been warning that the Bonds were deeply oversold, and this oversold condition is now being rectified.

With no Treasury supply coming next week and light corporate and muni calendars, we think it entirely possible that the current rally in the Long Bond contract may be stretched up another 1 or 2 points.