Bond & equity index report for Sept. 18

SUMMARY OF UPCOMING DATA 09/18/09

  • QUADRUPLE WITCHING DAY (EXPIRATION OF SEPT STOCK FUTURES, STOCK INDEX FUTURES, STOCK OPTIONS, STOCK INDEX OPTIONS.)

DATA RESULTS 09/15/09

HOUSING STARTS (598 K VS.600 K), JOBLESS CLAIMS (545 K VS. 575 K)

PHILADELPHIA FED SURVEY (14.1 VS.8.0)

EIA INVENTORY READING NATURAL GAS (66 BCF)

US 2, 5, YEAR NOTE AUCTIONS (2 YR $43B, 5 YR $ 40B, 7 YEAR $29B)

US DEBT REVIEW AND OUTLOOK

U.S. Treasuries rebounded one what could be called a "sell the rumor, buy the fact" sentiment undertaken by traders on Thursday’s session. The Treasury announces that it would be offering $112 billion of new two-, five- and seven-year Treasury debt next week. The amount was in line with expectations.

Concerns regarding sustainability of recent gains, underlying negative data revealed in the Philadelphia Fed Survey, and stabilization in the fall of the U.S. dollar helped bring back buyers to secure government debt as equities lost some of their recent luster and sold off. The market appears to remain range bound for the near term, with downward pressure from supply concerns set to meet changing market sentiment as the upcoming earnings season may produce concerns that equity gains have come "too far too fast"

Technically, December 30-year bond futures strong gains may have been a short covering rally, as the 61.8% retracement level at 120-11 appears to be holding for the immediate term. The market appears to be setting up in a series of lower highs on a daily chart and the pattern forming looks to be setting up for a test back down to 117-12. Significant resistance for the contract looks to form at 121-06.

US EQUITY REVIEW AND OUTLOOK

U.S. Equities took a breathier from recent gains on Thursday. The advent of quadruple witching (expiration of stock futures, options, stock indices futures and options) seemed to give buyers pause to think about the unchecked momentum of recent gains. Disappointing results from Oracle and Federal Express uncovered a potentially negative outlook for the upcoming earnings season, as sentiment may conclude that the justification for recent gains may not be met by business activity outside of the inevitable pullback of government fiscal stimulus.

Profit taking hit many of the sectors which had been leading the market higher. Energy, materials, and technology shares staged the majority of pullbacks today

Technically, December S&P futures range tested near both levels of support and resistance listed on Wednesday’s report. Looking for market to continue range testing in near future with momentum building for tests of support levels. Support remains set at 1056.00, with 1042.80 showing as a significant level that needs to hold for near term bullish sentiment to remain in place. Resistance holds at 1073.75 with a break and hold above this level setting up for a possible move higher to 1083.50.

US DEBT FUTURES

OPEN

HIGH

LOW

CLOSE

CHANGE

US Z9 (US 30 YRS)

118-30

120-10

118-19

120-03

+1 06/32nds

SP Z9 (S&P 500)

1067.00

1075.00

1061.40

1067.50

-.50

SP U9 (S&P 500)

1062.30

1070.50

1056.50

1062.80

-.70

Prepared by Rich Roscelli & Paul Brittain.

PLEASE EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM

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. Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. 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.

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