Bonds and notes rally in thin trade
For all intent and purposes, U.S. Treasury markets were closed in observance of Veterans Day. For futures traders, this simply means that the open outcry trading pits were closed but electronic execution was possible. As you can imagine, although the markets were moving the volume was extremely light. Nonetheless, there were significant price changes so I felt compelled to write a newsletter.
Economic data and news was non-existent so we will jump right into the technical aspect of fixed income security futures. The December 30 year bond futures contract reached and breached my original target of 118'14 and looks to be headed higher. Immediate resistance comes into play near 119 and at that point we may see a digestive pullback. However, should equities continue to struggle I believe that the long bond will see prices near 121 in the coming days.
The 10-year note looks promising for the bulls in the next handful of trading sessions; 116'24 looks to be a realistic target but depending on volatility on Wall Street we may be in store for even higher prices and lower yields.
I still believe that the five-year note is largely overbought, but you may want to consider buying the 116 calls for insurance. They are running about $500; call me for details.
Treasury Bond 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.
November 4 - Sell 1 December Five year note futures at 115'16.
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
October 29 - Sell 1 December Eurodollar at 97.79
· October 31 - Our clients were advised to buy the November 97.75 call for 17 ticks as an insurance policy. Assuming a fill at 97.79 the net risk on this trade is limited to $325 plus commissions and fees. The profit potential is theoretically unlimited!!
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
www.DeCarleyTrading.com
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.
