Today marked the fourth consecutive session in which the day's trading range was large, highly directional, and yet overall directionless. Since Wednesday of last week, the market has had big up days followed by big down days but little progress has been made in either the bull camp, nor the bear camp.
Traders seemed to all be shrug off the fact that last week was the first time in history that the Treasury held four auctions in a since week. Contrary to six weeks ago, supply concerns are no longer in the forefront of the minds of traders. Instead, they are looking toward the stumbling economy and the consistent demand for Treasury securities. Don't forget that the June employment data is still resonating through the markets and the fact that Vice President Joe Biden admitted that the administration had underestimated the severity of the economy. Also, if Nouriel Roubini was right in saying that, "The June employment report suggests that the alleged 'green shoots' are mostly yellow weeds that may eventually turn into brown manure"; this rally could have some room to move higher in the long run.
In the near-term, however, it seems like the market could be in store for another day or two of back and filling trade. On Friday we predicted a bond market turn around should equities and crude oil trade higher. We were right in two of three markets but if crude bounced the way that we think that it could, we may see some follow through selling in Treasuries. We have revised our downside targets to 118 in the 30-year bond, 116'20 in the 10-year note and 115 in the 5-year note.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
June 26th - We recommended that our clients sell the August Bond 124 calls for 20
• We recommend buying this back for 6 or less.
• July 8 - We recommended re-selling or adding on to this position near 27 to 30 ticks.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
July 2 - Clients were recommended to sell the 5-year note near 115'15 and purchase either a 116 call or a 115.50 call for insurance. The trade offers limited risk with unlimited profit potential.
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
Traders seemed to all be shrug off the fact that last week was the first time in history that the Treasury held four auctions in a since week. Contrary to six weeks ago, supply concerns are no longer in the forefront of the minds of traders. Instead, they are looking toward the stumbling economy and the consistent demand for Treasury securities. Don't forget that the June employment data is still resonating through the markets and the fact that Vice President Joe Biden admitted that the administration had underestimated the severity of the economy. Also, if Nouriel Roubini was right in saying that, "The June employment report suggests that the alleged 'green shoots' are mostly yellow weeds that may eventually turn into brown manure"; this rally could have some room to move higher in the long run.
In the near-term, however, it seems like the market could be in store for another day or two of back and filling trade. On Friday we predicted a bond market turn around should equities and crude oil trade higher. We were right in two of three markets but if crude bounced the way that we think that it could, we may see some follow through selling in Treasuries. We have revised our downside targets to 118 in the 30-year bond, 116'20 in the 10-year note and 115 in the 5-year note.
**Seasonality is already be factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option Trading Recommendations
**There is unlimited risk in naked option selling.
June 26th - We recommended that our clients sell the August Bond 124 calls for 20
• We recommend buying this back for 6 or less.
• July 8 - We recommended re-selling or adding on to this position near 27 to 30 ticks.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
July 2 - Clients were recommended to sell the 5-year note near 115'15 and purchase either a 116 call or a 115.50 call for insurance. The trade offers limited risk with unlimited profit potential.
Eurodollar Futures Trading Recommendations
**There is unlimited risk in trading futures.
June 29 - Our clients were recommended to sell September Eurodollar futures while buying a 9937.5 call as insurance. The calls were getting filled near 7 ticks, and the futures near 9933. This makes the total risk on the trade at expiration $287.50 before commissions and fees.
