Bearish trade in longer dated contracts

2-14-13 TY.jpgThe fluctuation in yields has been similar to watching paint dry in the last 3 weeks. As seen on the chart above of 10-yr notes pricing has been sideways. Remember there is an inverse relationship so when prices go higher yields go lower. My stance is we will trade higher from the current base which would mean yields should track lower. We are probing the 9 and 20 day MAs as I deliver this piece. It will take a penetration of the down sloping trend line just above current trade.
I suggest using the Fibonacci levels as seen on this chart as your objectives on any bullish trades. It is not a whole lot of reward as a move to the 50% Fib level would only amount to about $1000 appreciation per futures contract. The reality the risk should only be about half of that though using stops under the recent lows so I guess it fits the bill for a trade; $1 of inherent risk for $2 of perceived profit.
If securities ever trade lower like I’ve been shouting for weeks we should see the flow of money out of stocks and into Treasuries. To some extent I am speaking my position as I think equities should correct. I likely will not take this trade for clients but if I am correct it should lift the short end of the curve as well; Euro-dollars to a level I would like to re-establish bearish trade in longer dated contracts…stay tuned.
To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

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