Is a bond bear rush coming?

The benchmark S&P 500 is now only 3.1% below its record high reached in October 2007. Stocks are further getting a big boost today from two key pieces of data: A narrowing U.S. trade deficit combined with very positive earnings from social business networking kingpin, LinkedIn. LinkedIn shares jumped 18.45% this morning on above consensus revenue and earnings. The MAR13 E-mini S&P 500 futures are trading up to new 2013 highs today at +8pts, or +.55%. We continue to hold our belief that the market’s rally is not over by any means, and our next upside target is 1530.

Many analysts are now saying the market is fairly valued, but we think differently, we think like traders, not analysts. We believe in following a trend, regardless of what the market is “supposed” to be doing. Therefore we believe the S&P 500 will continue to rally.

A huge story in the commodities markets is in the energy markets, mainly Heating Oil. Due to the Nor’Easter storms, heating oil prices are exploded for multiple days in a row, and now are up another $.055 today, trading at $3.255 (MAR13 contract). Our first upside target for this market is $3.40. RBOB Gasoline prices are also continuing to show strength today, trading up $.055 at $3.05 (MAR13 contract). Crude oil is up $.62 at $96.45. We believe the next $5 move in crude oil will be down as the market seems to have ample supplies. As always, any type of geo-political events or increased tension could make crude oil rally quickly.

We focus more on the U.S. 30-year bond market today. We have been writing about our bearish views of this market, and we still hold those views. With the stock market rallying to new 2013 highs today, we believe a sharp move down in bond prices will occur soon. Our next major support level for the 30-year bond futures is at 135. This month, this market broke a significant trendline connecting previous tops. It is also trading well below our first key resistance level of 145. With a narrowing trade deficit, a more upbeat Euro region outlook, combined with solid nonfarm payrolls reports recently, we believe the 30-year will indeed approach 135.

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About the Author
Anthony Lazzara

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.

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