February 23rd, 2010
Check out Carley's recent radio interview with Vince Rowe discussing her new book "A Trader's First Book on Commodities" and other topics :
Segment 1 http://clicks.aweber.com/y/ct/?l=6K1iZ&m=1d0Ck45KlKigzm&b=UVQdspjHvIQ7UBqeOs9CUQ
Segment 2 http://clicks.aweber.com/y/ct/?l=6K1iZ&m=1d0Ck45KlKigzm&b=F_ql4HeqtRZmyV.wdD2aIg
Consumer confidence plunges, Treasuries rally
The Treasury complex benefited from flight to quality trade in light of a weaker than expected consumer confidence number and a faltering stock rally. Yesterday's questionable auction has been long forgotten as the T-bond approaches our original upside target just under 118; the note followed suit to trade near (and a little above) our noted level of 118.
The day's volatility was triggered by an ugly consumer confidence report. The index was reported at 46, over 10 points lower than the previous reading and nearly the same below consensus estimates. Additionally, a relatively disappointing Case-Shiller index reminded traders of the turmoil in the housing sector...and without a recovery in real estate the economy will struggle to improve.
The Treasury auctioned $44 billion in 2-year notes at a rate of .0895%. The bid-to-cover was 3.33 and the indirect bidder (assumed to be foreign buyers) was 53.6%. The auction was relatively well received and was scored as a B+ by CNB's Rick Santelli. In post-auction trade the 30 year bond futures jumped nearly 15 ticks.
With the Treasury complex approaching resistance, we are growing relatively neutral in the near-term. After all, Ben Bernanke will be on the hot seat tomorrow and we have another 5-year note auction...and today's issue has set the bar high. It is possible that we will see some back and fill trading but we prefer to wait for a clearer picture. In the meantime, a close above 118 in the long bond could be signaling a continuation of the rally to the 120 area and this translated into the 118'27 area in the 10-year note.
If you were following our short bond put trade, our clients were advised to buy these back today at 8 or better. Assuming a fill at 23 getting in and exiting at 8, this is a profit of about $234 per contract before commissions and fees. If you are interested in this counter-trend option selling strategy and receiving our trade recommendations in real time, contact us by email or visit our website to view our recent webinar archives.
* 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.
February 18 - Our clients were recommended to sell April bond 111 puts for 23/24 today.
- February 23 - Our clients were advised to buy these back today at 8 or better. Assuming a fill at 23 getting in and exiting at 8, this is a profit of about $234 per contract before commissions and fees.
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.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.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.
