The markets were braced for volatility going into the Greek election on Sunday
The euro currency and equity markets around the world suffered losses on Friday in anticipation of a victory of the Syriza party in Greece. The Syriza are described as a far left party, so far left that some are referring to their approach as communism. The concern of investors and traders lies within ability of Greece to live by the austerity measures put into place by the previous administration in exchange for receiving the EU bailout.
Prior to the election, Syriza's stance was one of opposition to austerity but less than 24 hours after being elected there seems to be some signs of backing down from the cornerstone of their campaign. Specifically, Syriza's leaders have already pledged their desire to remain a component of the Eurozone. This was their primary bargaining chip; so most analysts are predicting "more of the same", rather than a dramatic change in the relationship between Greece and other European countries.
With this event behind us, traders will finally be looking to this week's Fed meeting. Both stocks and bonds have shown a tendency to grind higher into the Fed; we expect that to be the case in the coming days. The Fed will announce their interest rate decision on Wednesday afternoon.
We wouldn't mind seeing another Treasury rally, if seen it should probably be sold
Safe haven buyers bid bond prices spectacularly higher last night as investors were seeking shelter from a possible Greek fallout. However, as we mentioned above, the implications of the Greek election appear to be contained for now.
The overnight "Greek election" Treasury rally fizzled, but with the Fed meeting on tap we suspect buyers will temporarily make their way back to bonds and notes. Further, trading volume in cash market Treasuries is expected to be slow due to storms on the East coast; in such an environment the path of least resistance is often higher.
We'll be looking for a place to turn bearish going into, or beyond, the Fed meeting.
**Our overall outlook remains the same:**
We continue to be bearish Treasuries, but depending on what happens in currencies, it might be possible to see a 152ish print in bonds before selling comes back to the markets. If prices spike into the 152 area, we'll be shopping around for calls to sell.
Treasury Market Ideas
**Consensus:** We can't rule out a ridiculous route to 152'15ish; however, the best trade going forward is likely on the "short" side of the market. Could this be THE top?
**Support:** ZB : 147'19, 145'14, and 143'17 ZN: 128'14, 127'31, 127'10, and 126'05
**Resistance:** ZB : 151'28, and 152'17 ZN: 130'31, and 131'23
Position Trading Recommendations
*There is unlimited risk in option selling
Long March 138 puts near 20 ticks.
Wall Street is bracing for a blizzard, and the Fed
Seasonal statistics available to us suggest that mid-to-late January dips are typically buying opportunities. In addition, the Stock Trader's Almanac depicts both Wednesday and Friday of this week as being statistically bullish. Accordingly, we are relatively confident the bullish chart pattern and the tendency for stocks to rally into the Fed meeting are corroborating with history. We continue to look for a run toward the top of the trading range. The first target will be 2088ish.
Stock Index Futures Market Ideas
**Consensus:** A close above 2051 gives the bulls an edge. We should finally be headed to 2100/2130ish...we just took the scenic route. Look for first resistance near 2088.
**Support:** 2035 (pivot), 1998, 1981, and 1965
**Resistance:** 2088, 2117, and 2132
Position Trading Ideas
Flat
Day Trading Ideas**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
Sell Levels: 2052 (minor), 2062, 2069, and 2088
Buy Levels: 2038 (minor), 2023, 2017, 2002
In other markets....
September 15 - Buy March 2015 sugar 18.00 calls near 32 ticks.
December 19 - Buy the March bond 138 put for 20 (or the 139 put for 25.
December 19 - Get long the Aussie Dollar in a small way using e-micro futures. We were buying near .8120 to .8080.
January 13 - Buy back March crude 40/58 strangles and sell the March 39/54 strangles using half the quantity to reduce risk.
January 14 - Sell March 30-year bond 156 calls for about 30.
January 22 - Buy back the March 30-year bond 156 calls to lock in a quick profit ($250 to $300 per contract for most before transaction costs).
January 22 - Sell March Euro 109 puts near 34ish.
January 23 - Sell March Euro 117 calls near 40 ticks to hedge the existing puts.
(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)
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.
**Seasonality is already factored into current prices, any references to such does not indicate future market action.
**There is substantial risk of loss in trading futures and options.**
The euro currency and equity markets around the world suffered losses on Friday in anticipation of a victory of the Syriza party in Greece. The Syriza are described as a far left party, so far left that some are referring to their approach as communism. The concern of investors and traders lies within ability of Greece to live by the austerity measures put into place by the previous administration in exchange for receiving the EU bailout.
Prior to the election, Syriza's stance was one of opposition to austerity but less than 24 hours after being elected there seems to be some signs of backing down from the cornerstone of their campaign. Specifically, Syriza's leaders have already pledged their desire to remain a component of the Eurozone. This was their primary bargaining chip; so most analysts are predicting "more of the same", rather than a dramatic change in the relationship between Greece and other European countries.
With this event behind us, traders will finally be looking to this week's Fed meeting. Both stocks and bonds have shown a tendency to grind higher into the Fed; we expect that to be the case in the coming days. The Fed will announce their interest rate decision on Wednesday afternoon.
We wouldn't mind seeing another Treasury rally, if seen it should probably be sold
Safe haven buyers bid bond prices spectacularly higher last night as investors were seeking shelter from a possible Greek fallout. However, as we mentioned above, the implications of the Greek election appear to be contained for now.
The overnight "Greek election" Treasury rally fizzled, but with the Fed meeting on tap we suspect buyers will temporarily make their way back to bonds and notes. Further, trading volume in cash market Treasuries is expected to be slow due to storms on the East coast; in such an environment the path of least resistance is often higher.
We'll be looking for a place to turn bearish going into, or beyond, the Fed meeting.
**Our overall outlook remains the same:**
We continue to be bearish Treasuries, but depending on what happens in currencies, it might be possible to see a 152ish print in bonds before selling comes back to the markets. If prices spike into the 152 area, we'll be shopping around for calls to sell.
Treasury Market Ideas
**Consensus:** We can't rule out a ridiculous route to 152'15ish; however, the best trade going forward is likely on the "short" side of the market. Could this be THE top?
**Support:** ZB : 147'19, 145'14, and 143'17 ZN: 128'14, 127'31, 127'10, and 126'05
**Resistance:** ZB : 151'28, and 152'17 ZN: 130'31, and 131'23
Position Trading Recommendations
*There is unlimited risk in option selling
Long March 138 puts near 20 ticks.
Wall Street is bracing for a blizzard, and the Fed
Seasonal statistics available to us suggest that mid-to-late January dips are typically buying opportunities. In addition, the Stock Trader's Almanac depicts both Wednesday and Friday of this week as being statistically bullish. Accordingly, we are relatively confident the bullish chart pattern and the tendency for stocks to rally into the Fed meeting are corroborating with history. We continue to look for a run toward the top of the trading range. The first target will be 2088ish.
Stock Index Futures Market Ideas
**Consensus:** A close above 2051 gives the bulls an edge. We should finally be headed to 2100/2130ish...we just took the scenic route. Look for first resistance near 2088.
**Support:** 2035 (pivot), 1998, 1981, and 1965
**Resistance:** 2088, 2117, and 2132
Position Trading Ideas
Flat
Day Trading Ideas**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
Sell Levels: 2052 (minor), 2062, 2069, and 2088
Buy Levels: 2038 (minor), 2023, 2017, 2002
In other markets....
September 15 - Buy March 2015 sugar 18.00 calls near 32 ticks.
December 19 - Buy the March bond 138 put for 20 (or the 139 put for 25.
December 19 - Get long the Aussie Dollar in a small way using e-micro futures. We were buying near .8120 to .8080.
January 13 - Buy back March crude 40/58 strangles and sell the March 39/54 strangles using half the quantity to reduce risk.
January 14 - Sell March 30-year bond 156 calls for about 30.
January 22 - Buy back the March 30-year bond 156 calls to lock in a quick profit ($250 to $300 per contract for most before transaction costs).
January 22 - Sell March Euro 109 puts near 34ish.
January 23 - Sell March Euro 117 calls near 40 ticks to hedge the existing puts.
(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)
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.
**Seasonality is already factored into current prices, any references to such does not indicate future market action.
**There is substantial risk of loss in trading futures and options.**
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