carleygarner
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November 30th, 2009
Look for our market outlook quoted in the December issue of Futures Magazine!
Treasuries soar in holiday trade
News of a possible Dubai World debt default, Treasuries spent the Thanksgiving shortened trading sessions running wild. We had mentioned last week that we felt as though the quiet trade was due for an increase in volatility and as expected the price move brought bonds and notes to better levels. The strength of the rally was a bit more than we had originally anticipated but we feel as though the bull run is nearing a temporary high. After all, a Dubai World debt restructure wasn't a complete surprise and had the news hit during something other than thin holiday trade their might not have been nearly as much panic. That said, the impact of a Dubai default on the U.S. markets is relatively minimal. The market's concerns were likely focused on the possibility of similar news from many other entities.
Our clients were recommended to cancel the standing order to sell the January bond 125 calls for 20. Instead, they were encouraged to sell the February 128 calls for about 25 ticks (fills ranged from 24 to 25). This trade offers a slower rate of premium erosion but also carries a lower delta (less immediate risk) and has much more room for error. Given the uncertainty of last week's events and the market's reaction to such, it seems as though being prudent is the way to go. If you would like to be notified of changes in trading recommendations that occur intraday, such as this, open a trading account with DeCarley. We offer full service as well as discount online trading and all of our clients receive email updates during the trading day.
Aside from the Chicago PMI, traders had little news to go on Monday morning. The regional purchasing managers index pointed toward growth at a reading of 56.1; much better than the expected 53. The news will pick up tomorrow with the ISM index, constructions spending and pending home sales.
Today was first notice day for the December bonds and notes; you should be trading the March contract going forward. If you are long December futures you run the risk of receiving a delivery notice which can be a costly obligation to get out of. If you are short, you won't be delivered upon but you will begin to run into liquidity problems.
Our upside targets were reached in the bonds and notes (and then some) so we are looking temporarily lower from here. The March 30-year bond futures face resistance near 123'04 and then again just under 124 but we doubt that the bulls will have enough momentum to hold such lofty prices. If you are trading the March note, a retest of the holiday high is possible near 120'15 or even a bit higher but we feel like the overall direction will be lower in the near-term.
* 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. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**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.
November 15 - Sell the January Bond 125 calls for 20 ticks or better.
• Our clients were recommended to cancel this order
November 30 - We recommended to sell the February Bond 128 calls for about 25 ticks (fills were reported from 24 to 25).
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
[email protected]
1-866-790-TRADE
Local : 702-947-0701
www.CarleyGarnerTrading.com
www.DeCarleyTrading.com
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
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.
Look for our market outlook quoted in the December issue of Futures Magazine!
Treasuries soar in holiday trade
News of a possible Dubai World debt default, Treasuries spent the Thanksgiving shortened trading sessions running wild. We had mentioned last week that we felt as though the quiet trade was due for an increase in volatility and as expected the price move brought bonds and notes to better levels. The strength of the rally was a bit more than we had originally anticipated but we feel as though the bull run is nearing a temporary high. After all, a Dubai World debt restructure wasn't a complete surprise and had the news hit during something other than thin holiday trade their might not have been nearly as much panic. That said, the impact of a Dubai default on the U.S. markets is relatively minimal. The market's concerns were likely focused on the possibility of similar news from many other entities.
Our clients were recommended to cancel the standing order to sell the January bond 125 calls for 20. Instead, they were encouraged to sell the February 128 calls for about 25 ticks (fills ranged from 24 to 25). This trade offers a slower rate of premium erosion but also carries a lower delta (less immediate risk) and has much more room for error. Given the uncertainty of last week's events and the market's reaction to such, it seems as though being prudent is the way to go. If you would like to be notified of changes in trading recommendations that occur intraday, such as this, open a trading account with DeCarley. We offer full service as well as discount online trading and all of our clients receive email updates during the trading day.
Aside from the Chicago PMI, traders had little news to go on Monday morning. The regional purchasing managers index pointed toward growth at a reading of 56.1; much better than the expected 53. The news will pick up tomorrow with the ISM index, constructions spending and pending home sales.
Today was first notice day for the December bonds and notes; you should be trading the March contract going forward. If you are long December futures you run the risk of receiving a delivery notice which can be a costly obligation to get out of. If you are short, you won't be delivered upon but you will begin to run into liquidity problems.
Our upside targets were reached in the bonds and notes (and then some) so we are looking temporarily lower from here. The March 30-year bond futures face resistance near 123'04 and then again just under 124 but we doubt that the bulls will have enough momentum to hold such lofty prices. If you are trading the March note, a retest of the holiday high is possible near 120'15 or even a bit higher but we feel like the overall direction will be lower in the near-term.
* 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. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.
**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.
November 15 - Sell the January Bond 125 calls for 20 ticks or better.
• Our clients were recommended to cancel this order
November 30 - We recommended to sell the February Bond 128 calls for about 25 ticks (fills were reported from 24 to 25).
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
[email protected]
1-866-790-TRADE
Local : 702-947-0701
www.CarleyGarnerTrading.com
www.DeCarleyTrading.com
*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.
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.
