Futures Market Blog

March 3rd, 2009

Option traders, if “Commodity Options” can save you one tick…you will recoup most of your investment.  Get it now through Amazon.com or Borders.com!

High flying bonds, low yields

Treasury futures failed to react to another batch of negative housing data but did seem to be in tune with testimony out of Washington.  Early morning weakness was exacerbated by a comment made by Federal Reserve Chairman Ben Bernanke claiming that the increase in government debit issuance was unwelcome but failure to act with financial and economic rescues would be even more costly.  Bond and note traders took the comments as a “warning” of further issues to come.  However, it was a subsequent statement by Bernanke insinuating that the appetite for debt will remain high that sparked buying in bond and note futures.

Some insiders noted that many Treasury traders preferred the short side of the futures market in anticipation of a stock market rally.  When early attempts at an equity rally failed, those positioned on the short side of bonds and notes began to cover positions to force prices higher.

Although the negative correlation between stocks and bonds has been magnified lately, it seems as though they may be poised to go up together.  Seasonal tendencies should keep a floor under T-bond and T-note futures while short covering could bring the major indices considerably higher in the coming week or so.  That said, I prefer waiting for higher prices to be a bear.

We see significant resistance in the June long bond near 125′25 but feel as though technical levels will give way to a rally above 128.  Note trade should find support near 120′27 in the June contract with our upside projection at 122′16.  If we are wrong about the direction, the next area of support is near 119′05.  A “safer” bet may be looking to sell the June 5-year note near 127′27.

* 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.

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.

• March 3 - Sell the June 5-year note at 118′09 (we may have to adjust this lower as we go).

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

————-

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.

February 26th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Horrible data and technical support may trigger rally

Bonds and notes spent the day paring early morning losses.  The Federal Reserve issued $22 billion in 7-year notes for the first time since 1993 and found a decent amount of demand for the security.  Additional price support was found as rumors that Chinese officials seemed to imply that buying fixed income assets would still be a large part of their operations despite their shrinking budget.

Perhaps now that the record $94 billion weekly supply issuance has been accounted for, Treasuries will find reason to make their way modestly higher.

Despite the fact that bonds traded underwater throughout the entire session, there were some glimmers of hope for the bulls.  The day’s economic data, although expected, was grim at best.  Durable goods dropped 5.2% and the initial jobless claims jumped to an astronomical 667,000.  Adding pressure, new home sales were reported to be a 309,000, well below expectations for 324,000.

Seasonal tendencies for the Treasury market suggest that would could see near term strength.  Additionally, major technical support levels held in Thursday’s session and Friday’s are known for seeing counter-trend trade.  Accordingly, we are leaning higher going into tomorrow.  Our clients were recommended to buy Five-year note futures near 117′10 and are looking for about 118′06 but will be willing to take an early profit if the opportunity presents itself.

We pointed out that buying would probably come in near 125′06 in the 30-year bond, and that proved to be relatively accurate.  From here, we see the potential for the market to rally to 127′10 and possibly even 129′20.  The 10-year note could see 121′20 in the coming days.

* 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.

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.

February 26 - Our clients were recommended to buy the March 5-year note near 117′10.

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

————–

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.

February 25th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Treasury yields tick higher

The only economic news to speak of was existing home sales which were reported to be weaker than originally expected.  However, today was relatively eventful given the Bernanke testimony and last night’s Presidential address.

Ironically, Treasuries sold off on word of the deeper than anticipated housing slump.  Traders are clearly seeing negative news as a hint toward more economic stimulus programs and thus U.S. backed debt issues and seem to be seeing supply issues as a priority.  However, as mentioned in yesterday’s newsletter this theme may temporarily fade.

Volume was dramatically light as traders see the lack of direction and event risk a potential recipe for disaster.  However, the economic data will be picking up in the last couple of days and should lure, at least some, traders back to the markets.

Some of the day’s losses were temporarily pared following the 5-year note auction.  Despite low yields, buying interest continues to show up as investors flock to safety.  Eventually, it seems as though trade will consider this into the equation and find at least temporary strength.  However, over half of the issued Treasury debt is being held by foreign institutions.

One has to wonder how long they will be able to continue buying at this pace.  Just recently, China’s central bank said “External demand is shrinking, some sectors have overcapacity, and urban unemployment is rising.  Downward pressure on economic growth is increasing.  There exists a bid risk of deflation.”

As you can infer from the recent commentary, we are on the fence in terms of an immediate directly but are slightly leaning higher due to fundamental pressures noted in yesterday’s newsletter.  In the long bond we see support near 126 and again just above 125.  At this point, we expect this general area to hold.  Resistance remains at 130.  The 10-year note looks to be headed toward 121′13 at which time we like being cautiously bullish.

* 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.

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.

Flat

————

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.

February 24th, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Big Day but small trading range

Treasury bonds continue their path of nonexistent progress.  As mentioned yesterday, large intra-day ranges haven’t resulted in yield changes.  It has been a big rally followed by sharp selling.  The only thing that we can say for sure is that this can’t last.  It is a tough call as to which direction the market may  break out but we believe that the initial move may be higher.  Here is why.

If you follow seasonal patterns in the financial markets as I do, you are likely aware  that the long bond tends to move moderately higher from now throughout the first and second week of March.  Going beyond mid-March, the market should resume their downtrend.

Along with seasonal support, Treasury prices may find solace in the fact that the market has attempted to price in a majority of the bearish news.  For example, the expected inflation pressures arising from the massive injections of capital into the system have already been somewhat accounted for in the December/January decline.  Given that the implications are months or years away, the market may have priced in what it can for now.  Also, government debt issues of mass proportion have kept pressure on Bonds and notes but the situation is known and the markets have adjusted accordingly.  That said, large supplies have been mitigated by strong demand for safe haven assets.

From my conversations with followers, insiders, etc.; I have concluded that the average retail trader is highly bearish.  In a longer term time-frame I must say that I agree.  However, it seems as though the path of least resistance may be temporarily higher.

I see resistance at 130′15 and support near 125 in the March 30-year bond futures.  Note  futures traders should look for support near 121′14 and resistance near 124′24.  I like buying the five-year note near 117′14 but would be a seller near 119′14.

* 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.

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.

Flat

———–

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.

February 23rd, 2009

Pick up your copy of “Commodity Options” published by FT Press in any major bookstore or online retailer!

Treasury Yields nearly flat despite volatility.

Intra-day volatility in the Treasury market has been incredibly high, yet daily volatility has been consistently diminishing.  Clearly, confusion is at an extreme due to unprecedented Fed debt issues and credit market turmoil.  Political and corporate policy remains questionable at best, and the outcomes of their actions are even less uncertain.  Accordingly, it is very difficult to be a directional trader in the near term.

I have been repeatedly asked where I think the March 30-year bond is going, and the only answer that I can come up with is “I don’t know”.  Rather than making a prediction and crossing my fingers, I prefer to simply wait and see what unfolds.  If you are the type of trader that feels as though you must always be in the markets, you are fighting the odds in these market conditions.  The long bond has spent weeks trading in a range between 130 and 125 and although seemingly comfortable now, they won’t be for long.

Supply concerns will be confirmed with the auction of $40 billion in 2-year notes, $32 billion if 5-year notes and the $22 billion in 7-year notes which were last issued in April of 1993.  That said, as demand for the issues continues Treasury traders may look to equities and economic data for primary guidance.

The 30-year bond futures should find resistance near 131 with support at 125, note traders should look for resistance at 125 and support remains at 121′15.  Once again, I prefer the sidelines over trying to pick a near term direction.  Let’s see what happens 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.

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.

Flat

———————-

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
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.