September 8th, 2009
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Long-bond uch'd
Treasury traders must have stayed on holiday and I can't say that I blame them. Today was a slow news day and provided little incentive to come back to work following the last three-day weekend of the summer.
On the other hand, the Fed was back at it today. They purchased $4.95 billion of the $14.486 billion in bonds offered by dealers. However, the market was pre-occupied with another record-breaking week for auctions.
Optimism over the auctions kept the short end of the yield curve above water but the long end suffered in early morning trade as investors mull over the boatload of supply coming down the pipeline. The Treasury auctioned $38 billion in 3-year notes today along with $29 billion in both the 3 and 6-month bills...and that is only the beginning. the Treasury will sell re-opened issues of 10 and 30 year fixed income securities over the next few days.
We have pivotal support in the 30-year in the mid-118's and so far it appears to be holding. Our chart-work suggests that that the long bond is gunning for 122 resistance but we wouldn't be surprised to see 124ish at some point in the next week or two. However, should we get there we would be highly bearish. In the meantime, we will wait for what we feel is a good opportunity to be involved. If we are wrong, and the market breaks and holds below 118'10 the next stopping point will be 116.
10-year notes never reached our upside target of 119, but they may be on their way. We see first resistance near 118'15 and will likely turn bearish at such levels.
Our idea to be a seller in the 5-year note near 116 turned out to be a good one, but we think that the market could be headed for 116'08ish from here.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.carleygarnertrading.com/
http://www.decarleytrading.com/
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
There is substantial risk of loss in trading futures and options.
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
