November 23rd, 2009
Look for our market outlook quoted in the December issue of Futures Magazine!
Risk trade leaves Treasuries out of favor
Bonds and notes suffered at the hands of equity gains as investors are seep to be pouring money into "risky" assets such as commodities and equities. However, as has been the case, the selling across interest rate products lacked enthusiasm.
With the Thanksgiving Day holiday upon us, it is likely that the markets will see very little trading volume throughout the remainder of the week. Despite an action packed economic calendar and another round of sizable auctions, traders seem to have already called it quits. Some liquidity will come back for the first few weeks of December but the real volume typically doesn't show up until well into January.
The absence of trading volume, and traders, is important in that many proprietary desks leave their second string traders at the wheel. The combination of illiquidity and "back-up" traders can mean large and unexplainable market moves. If you recall, last year a few sessions before Thanksgiving the 30-year bond futures rallied approximately 10 handles over the course of three trading sessions. Seven of those handles took place in a single trading day.
With this in mind, less trading is "more" during this time of year and entry prices are even more critical than what would otherwise be.
Failure for the bears to control trade this morning on what seemed like overwhelmingly bearish conditions could lure another round of short selling. Also, those that have yet to offset positions ahead of the holiday will be looking to do so and based on the most recent COT data the large traders were net short on Friday. This could mean a rally to 122 in the 30-year bond and just over 120 in the 10-year note.
* 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.
November 15 - Sell the January Bond 125 calls for 20 ticks or better.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
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.
