A positive jobs number and things heating up in Iran and Crude is back on the move advancing 1.5% today. We may see a bounce but until we see a trade back over $99 I still am thinking prices have more downward pressure. My target in March is a trade closer to $93-94 in the coming weeks. What is disturbing though is the disparity between the Crude daily chart and the distillates as Crude is on the lower end of the recent trading range while heating oil and RBOB are breaking out to new highs. It is a classic case of the tail wagging the dog. My sense is all products should trade lower in the coming weeks but time will tell. Natural gas is cheap but with the absence of two major events; either extremely cold weather or a significant shut in on production there is no catalyst for prices to move higher...look elsewhere.

Job growth and lower unemployment rate had stocks off to the races with equities at fresh 2012 highs up near 5% ytd. Stocks will likely forge their way to higher territory as I am back in the camp as being long makes sense as long as the 9 day MA holds. That pivot point comes in the S&P at 1318 and in the Dow 12655. Gold and silver in my estimation made an interim top this week and we should see correction in the short run. Gold lost 1.8% with the June contract giving back most of the week's gains today. I would expect a further $50-75 correction in the weeks to come. A 50% Fibonacci retracement from the current leg puts prices back at $1650. Silver was able to hold on to most of the week's gains but still registered a 1.6% loss today. A correction here would likely drag March futures back near $31/ounce.

Nothing new to report in forex as I am still expecting a bounce in the dollar and for the other crosses to back off. In full disclosure I have no recommended plays until we find a top in foreign currencies. OJ continues to slide as prices have lost ground eight of the last nine sessions...expect that to continue. I like the move in cocoa bouncing off the 50 day MA but the inverse relationship it generally exhibits to the dollar has me holding off on new purchases but have this commodity on your radar in case the dollar moves south as opposed to north as I expect. Base on the Market's assumption that sometime in the next year we may see rates increase

Treasuries got hit hard today with 30-yr bonds depreciating 1.5%. Aggressive traders can fade rallies in 30-yr bonds and 10-yr notes with stops just above their 20 day MA's. Those levels are 143'11 and 131'06 respectively in the March contracts. Today in the AG music chairs market corn and wheat was flight while soybeans advanced 1.27%. We could see prices grind higher but I prefer to be on the sidelines with customers if and when they get stopped out of their longs that they should be trailing. A leg lower could be bought but I would like to see a correction before initiating new positions. Expect further downside in live cattle as today prices gave up 1.2%. A 50% Fibonacci retracement in April puts prices to 125.70 while 61.8% drags prices to 124.75. Lean hogs are a buy on dips that hold the 20 day MA; in April at 88.35.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Stocks and commodities are expected to see more downside with Treasuries and the dollar seeing the inverse...in my opinion. Inside day in Crude oil with prices closing lower by 1.3%. Considering outside markets I expected more downside. The test will be if we can break $98 in January on a closing basis in the coming sessions. We are still targeting a trade closer to $90 and would continue to use rallies as selling opportunities. Natural gas was lower by 2% today trading near $3.25 yet to find a bottom. Even though clients have light long exposure it is a slow death. If we do not see stabilize soon we will use rallies as exit doors. January will need to convincingly re-take $3.50 before expiration for me to believe an interim bottom is in. Equities are lower by 1.5-2% starting the week on a bearish note. A settlement below the 20 day MA which is just under today's lows should confirm a move lower. I cannot imagine anything too bullish out of the Fed this week. Additionally with the flow of money likely headed into Treasuries on the numerous auctions we think the path of least resistance should be lower...trade accordingly.

Hello correction in the metals with gold down $50/ounce and silver just under $1/ounce. These moves represent roughly a 2.8-3% depreciation. Gold is at a two month low and with the chart damage done today do not rule out an additional $50-75 reduction. Silver traded under $31/ounce but managed to pare losses. On a breach of $30.75 we see $29 coming in play...trade accordingly. The dollar index bounced off the 20 day MA accelerating to a two week high today pressuring other crosses. We expect further downside on all crosses thinking the commodity currencies will get hit the hardest. Aggressive traders can gain bearish exposure in the Aussie and Loonie. Maybe a bottom in cocoa with a 5% gain today and major reversal. All it took was a bearish article in the WSJ today and a interim bottom may have formed after the 30% reduction. Buy dips and put stops below today's low. Being bullish has been painful but as we've said we think prices overshot to the downside.

Coffee hit a fresh 2011 low today with prices down nearly 3%. Further pressure could erode prices under $2/lb...bearish trade is the play in our opinion. Traders can start scaling back into 2013 Euro-dollars with stops above the recent highs. I would suggest light exposure until we get through the FOMC meeting this week. Ags held on today as the recent lows appear to be good support...at least for now. If we fail to make fresh lows this week we may re-visit the idea of scaling into longs with clients...stay tuned. Exit remaining bearish trade in live cattle as we are nearing a buy zone. Let's see the action tomorrow before committing but February live cattle is likely a buy very soon. Trail stops down on lean hogs as we are nearing our bearish targets.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

High flying equities and optimistic economic data helped to push yields higher and Treasuries lower on Friday. Although the week tends to end with counter trend moves, each of the financial markets experienced price changes in the direction of recent trade. There could be many explanations for this, but the incredibly light volume leads us to believe the buying in stocks and selling in Treasuries was the result of traders "stuck" in unfavorable positions lightening their load (or maybe even throwing in the towel) ahead of the weekend. After all, a nearly 9 handle move in a little over a week for the 30-year bond could have easily been too much for some bulls to handle.

On the economic front, retail sales were reported at a much better than expected 1.1% (estimates were calling for .6%) and import/export prices were relatively stable. The Michigan Sentiment came in at 57.5 despite expectations for 60 but it was still considered a decent reading relative to the dooms-day environment we were in just a few weeks ago.

The Fed has been actively buying in the long end of the curve compliments of Operation Twist, but they are also active in some intermediate-term maturities. Today, they purchased $4.6 billion worth of securities with expirations from 2019 to 2021 through POMO.

We are optimists at heart but this move in the financial markets has probably been too, too fast...even if the trends continue.

This morning's economic data was relatively neutral for bond traders. Initial claims dropped modestly to 404,000 and the trade balance was slightly smaller than expected at -$44.8 billion. Similarly, Fed buying, uncertainty over Europe and a seasonal tendency for higher Treasury prices has us leaning higher in the short-term.

The last few days have seen choppy and directionless action and this tends to enable stop orders on both sides of the consolidation pattern to form. Our best guess is that we see some sort of modestly new low (to run the sell stops, of course) before turning around and growing rally legs.

Look for support in the 30-year bond in the mid to low 137's to be a bull, and in the note this equates to about 127'10.


* 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 factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations

**There is unlimited risk in naked option selling.

9 - 6 - Some clients are holding synthetic puts in the 5-year note in which they are short December futures contracts and long December 123 call options. Depending on entry, total (limited) risk on the trade is between $700 to $800 and we have until late November for something to happen.

10-7 Clients were advised to sell a December 5-year note 121.50 put for about 24 ticks. This reduces the cost of the trade and hedges against a possible bounce during the holiday weekend.

10-11 Clients were recommended to offset the short 5-year note future and the short 121.50 put for a combined profit of about $900 before commissions and fees and dependent on exact entry and exit prices. However, losses on the original hedge (long 123 calls) diminish the profit. We are looking for a Treasury recovery to give us an opportunity to offset the long call at a much better price (smaller loss).

In other markets....

10-11 Clients were recommended to sell strangles in the November Euro (142/128 for conservative traders and 140/130 for aggressive traders), or December crude oil (98/67 for conservative traders and 96/70 for aggressive traders).

(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)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

twitter.com/carleygarner
www.linkedin.com/in/carleygarner

www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.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.

It is important when initiating trades to have targets. You will notice that we try to give price objectives when establishing long and short positions for our clients in most trades. After five positive sessions Crude looks like we will see a negative close with prices settling just above the 40 day MA. Taking a look at a longer term daily chart prices are bumping up against a trend line that has capped rallies since the highs in April when Crude was near $115/barrel. Aggressive traders can scale into longs expecting a $3-4 retracement. Natural gas lost 3.5% today and is now approaching the recent lows on the cusp of making new contract lows. Once again until we see a trade above $3.85 in November refrain from picking a bottom...this market remain a dog with fleas.

With the 1-1.5% advance in indices today we reached our target in the S&P and got within 10 points in Dow futures (see previous posts)...that is good enough for us. We are not suggesting reversing but exit all remaining longs in the indices is my suggestion. Yes an ascending triangle in the making in gold which should mean in the next few sessions we get a breakout before we reach the apex. A trade above $1694; the 50% Fibonacci level should be followed by $1744 the 38.2% level. Silver picked up nearly 2% briefly peeking its head above $33/ounce. Most clients have long exposure with a target of $35/ounce. The dollar has closed lower six out of the last seven sessions and is approaching the 50% Fibonacci levels mentioned at 77.00 in recent posts. The Loonie is fast approaching our par target even quicker than we anticipated. Tighten stops in this trade as we may get cross currents as we think metals are supportive but we expect a trade lower in energies...trade accordingly.

Aggressive traders can fade rallies in the Yen. In the coming days we will likely be establishing bearish plays in the Yen...stay tuned. Continue to buy dips in cocoa. OJ settled back above the 50 day AM for the first time since the first week of August. November longs are fighting back from the dead. We need further help from "Mr. Market" but clients have a chance. A trade closer to $1.70 should be used to offset remaining longs. 1-2 more basis points might be all we get lower in 30-yr bonds on this leg. If given the chance this week we would exit our clients bearish trades. The USDA report today proved to be bearish to wheat, neutral to corn and bullish soybeans and the markets traded accordingly. Corn was slightly lower, soybeans slightly higher and wheat gave up 5%. Some clients remain lightly long corn and soybeans expecting further appreciation in the coming weeks. Clients wait on the sidelines looking for a lower long entry in 2012 live cattle contracts.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Despite articles on popular business news websites regarding new interest in Treasury Credit Default Swaps (traders buying insurance against Treasury default).; the markets have voted, and it appears there is little fear of default. Those buying CDO's are venturing into illiquid markets to buy lottery tickets or insurance that will likely never pay off. Nonetheless, investors continue to buy Treasuries of all maturities without thinking twice (well, ok....they are probably thinking twice but are acting before the third thought has time to materializes).

There is also chatter about an inevitable ratings agency downgrade of Treasuries; I'm not convinced it is a sure thing, but I am convinced there is at least a 50/50 chance. With this said, I highly doubt the result of a downgrade from AAA to AA would trigger a significant outflow of funds from Treasuries...after all, where will they put it? If they are worried about the government defaulting, why would they think bank deposits, or sovereign debt would be any better?

Up until today, economic news has been overall bullish Treasuries (despite the lack of direction). Today's news, on the other hand, was overall optimistic toward the economy and, therefore, bearish for Treasuries. Pending home sales increased by 2.4% and initial claims for jobless benefits dropped to 398,000 (let's not get excited this is still an overall weak number).

In other news, the Treasury issued $29 billion in 7-year notes at a draw of 2.28%. The bid to cover is 2.63 and an indirect bidder take of 23.4%. All in all, this was a mediocre showing, but in light of the current environment I give it an A+.

We are finding it very difficult to move on with our lives (and trading) until the circus in Washington finally closes the tent doors. Accordingly, we will maintain our overall bullish stance in the short-term but caution that any such positions should be light and hedged. There just aren't any high probability trading opportunities for position traders here.

With that in mind, if we get the post-debt ceiling rally we think might be in the cards, the bears might want to consider entering in the mid to high 128's in the 30-year bond and a little above 126 in the notes (we know, you've heard this before...but with the market trading sideways for weeks, not much has changed).

* 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 factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

Flat

In other markets....

July 11 - Clients were recommended to sell the August Euro 132 puts for about 28 ticks in premium, or $350.

July 12 - Clients were recommended to sell the August Yen 129.50 call for about 28 ticks ($350).

July 12 - Clients were recommended to sell the August Gold 1610 call for about $500 but some fills came back much higher (in excess of 8.00) following late day spike.

July 18 - Clients were advised to sell the August gold 1540 calls for about $5.00 in premium.

July 19 - Clients were recommended to lock in a profit on the Short Euro calls, fills were coming in at 10 and 11. Assuming entry at 28 and exit at 10, profit before commission was $225 per contract.

July 19 - Clients were advised to buy back the 1540 calls (which were an "add-on" to our original bearish stance) near 3.30 to lock in a quick profit.

July 19 - Clients were recommended to buy back any 1610 August gold calls and then sell an August 1630 call and a September 1700 call to replace them. This was being done at a credit of $100 per contract.

July 20 - Clients were advised to buy back the August 1630 call at a quick profit of about $300 before commissions and fees on Wednesday morning.

July 27 - Clients were advised to add on to the short Yen call position by Selling a September 136 call for about 35.

(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)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

It was a relatively exciting day on the economic front, and action in Washington D.C. wasn't far behind. Early this morning traders were fed several pieces of economic data; including PPI, initial claims, retail sales and business inventories. Later in the day, it was Chairman Bernanke's semi-annual Senate Banking Committee testimony, and then a 30-year bond auction.

Initial claims were reported at a better than expected 405,000 (the prior was 418,000). Over 400,000 claims for unemployment is a horrible number in regards to historical standards but in this new world of stagnant growth, it was a pleasant surprise. Retail sales also beat estimates by coming in at rate at +.1% while most were looking for a draw. Most importantly, the inflation at the producer level (PPI) was reported to be a down tick of .4% but the core number was a positive .3%. All in all, the news was overall bearish for Treasuries and by the end of the trading session it was displayed in pricing.

The Treasury auctioned $13 billion in reopened 30-year bonds at a rate of 4.198% and a strong 2.8 bid to cover. With demand like that it is clear that investors aren't concerned over a possible debt ceiling issue in which a coupon default would occur. Most agree the likely resolution will be a last second buzzer beater extension...but hopefully this time there will be some sort of agreement to cut the budget deficit going forward.

On another note, Ben Bernanke scaled back his QE3 talk during a D.C. testimony. Yesterday, metals and currency traders began pricing in another round of Fed money printing after the Fed chair suggested that there could be more stimulus. Apparently they mistook "could" for "would". Ironically, the metals didn't really take back the price moves. Nonetheless, a small probability of QE3 doesn't give traders a reason to buy Treasuries but it should encourage the bears to avoid becoming overly excited by any down moves.

Today's selling (and the fact that we are headed into counter-trend Friday) makes us second guess our expectations for another run at new highs before a reversal can occur. We will cautiously look for such a move simply because chasing a (relatively) quiet market lower tends to be difficult.

The best trade is likely from the short side. Look for resistance near 127ish...Should the market see short squeezing, there are surely stops to run above the old highs and this could put the September contract into the mid to high 128's. A similar move would mean just under 126 for the September 10-year note. In the meantime, look for daily support near 125'03 and 123'23 in the note.


* 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 factored into current prices, any references to such does not indicate future market action.
Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

Flat

In other markets....

July 11 - Clients were recommended to sell the August Euro 132 puts for about 28 ticks in premium, or $350.

July 12 - Clients were recommended to sell the August Yen 129.50 call for about 28 ticks ($350).

July 12 - Clients were recommended to sell the August Gold 1610 call for about $500 but some fills came back much higher (in excess of 8.00) following late day spike.

(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)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.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.

ADP shocked the financial markets with a gangbusters prediction of the government's employment report. The payroll giant believes the private sector added 157,000 jobs. To put this into perspective, expectations were for about 60,000 and last month's figure was 36,000. The result was renewed softness across Treasuries but in reality, the selling was much less dramatic than what could have been justified by the news. After all, another 16 handle gain in the SPU's "should" have probably triggered the 30-year bond futures selling we have been looking for to bring the September contract closer to 122. At such levels, we will begin scouting bullish trades (if seen).

Adding to the day's bearish tone was a better than expected reading in weekly jobless claims. The headline number came in at 418,000 to beat estimates looking for 425,000 new employment benefit seekers. However, the number is still historically high and not necessarily the nail in the coffin of the jobless recovery.

In our opinion, ADP's blockbuster report created an environment in which it might be very difficult to meet the market's expectations for tomorrow's employment report. Simply put, the optimism expressed by investors (buying stocks and selling bonds) seems to have already priced in a great non-farm payrolls figure. If so, it could be difficult to keep the market down following any knee-jerk selling. After all, it would probably take a number in the 200,000's to be considered bearish Treasuries following today's ADP report.

We are sticking with the idea that the long side of the market will be the best short-term trade but we aren't comfortable being bullish at current levels. We'd like to see prices sub-122 before looking for a way to play the upside. Let's see what tomorrow brings.

We see support in the T-bond just under 122 but if tomorrow's report is much better than even ADP expects, the next level will be about 121 but we aren't necessarily counting on this. Look for support in the note in the mid 121's...and this is where we start liking the upside.

* 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.

Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

Flat

In other markets....

July 7 - Clients were advised to sell the August 1385 calls in the e-mini S&P for $8.00 or better. Fills were reported between $8.00 and $9.00.

(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)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.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.

The dollar and Treasuries breaking down and commodities and equities advancing...is this correlation back? The 9 day MA In August Crude has shifted to support now at $93.50 with resistance at the 18 day MA at $96.50. We remain cautiously bullish with a target in August future of $100/barrel. Crude 2% plus advance was driven by the 4.25% appreciation in RBOB and 3.25% gain in heating oil. Hedgers should have at least 40% of their fall hedges in place using the recent set back to gain ground. Natural gas closed lower for the first time in four sessions ...stay the course as $4.50 should be obtained in coming weeks...in my opinion.

The indices are getting close to our objective being the 50 day MA is 1307 and the 100 day MA is 1309.50 in September S&P futures. Failure to breach those levels in the coming sessions would likely mean a trade back to 1275...trade accordingly. The dollar index broke the MA's mentioned in previous posts and we should see a trade back near 74.00 into next week. As we alluded to yesterday with a trade higher in commodities the commodity currencies outperformed today; the Loonie higher by 1.27%, the Aussie 1.39% and the Kiwi 1.75%. Our pick is the Loonie and strength in the metals and energy complex should help lift prices to 1.0400.

Remain on the sidelines in livestock looking for a lower long entry in both lean hogs and live cattle. Gold and silver have likely began their next leg higher with gold advancing $11/ounce today and silver picking up an impressive 3.75%. August gold should find its way back to $1550 in the coming weeks and in September silver we should see $37/ounce. We hit our target in cocoa today and have advised clients to start lightening up. We see little resistance for another $150 so cut your size if you have multiple positions as opposed to leaving the entire trade. October sugar failed to make a new high but our clients bearish trades are still way under water...this should be a winning trade in July if you're willing to stay with it...again our target is a trade back near 23 cents in October futures.

USDA report out in the AM tomorrow so expect fireworks. We will carry longs in CBOT wheat and soybean oil into the report and be willing to buy corn and soybeans on a break. The chart in wheat looks the best as long as this week's lows hold. Three days running 10-yr notes and 30-yr bonds might finally be breaking down. Just a touch more and we will be putting in profit orders on clients shorts. Also one could fade rallies in long dated Euro-dollars...late 2012 contracts is our suggestion.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Investors are seeking quality, but with talk of defaults and debt ceilings, Treasuries just aren't the stellar attraction of "fear money" they once were. At the trough of equity trade in Friday' session, the long bond was treading water near 126, which was a gain of less than a handle on the day. Although 25 ticks is respectable, it could have easily been twice that in a more panic stricken environment or one in which investors put more value into the premise of "return of capital" rather than "return on capital". In other words, the mentality of investors in 2011 is far calmer than that of 2010. Only time will tell if panic will begin to set in, or if cool heads will continue to guide trade.

It has been a dreadfully slow news week, and today was no exception. Unfortunately, next week won't be much better; aside from retail sales and PPI the market will be left to sulk over last weeks disastrous data. With this in mind, as well as the tendency for Treasuries to "go out with a bang" we have to lean toward at least one more new high before a reversal (yes, yesterday's trade fooled us a bit).

Seasonality in Treasuries suggests some near-term softness could be followed by a mid to late summer rally...and yes, this can happen regardless of fundamentals, debt ceilings or even Treasury credit downgrades. It is often the less obvious market forces that guide trade, while the masses focus on the obvious (remember, most people lose trading on leverage).

That said, we'd rather be bears than bulls for the time being. Ideally, we would be most comfortable looking lower from what we see as significant resistance levels of 127ish and 124'10 in the September bond and note, respectively. In the meantime, look for support in bond futures near 124'13 and in the note near 122'26.* 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.

Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

June 1 - Clients were recommended to sell July bond 128 calls for about 30 ticks.

June 6 - Clients were advised to offset short bond calls at 15 ticks, or a profit of $235 to $300 per contract before transaction costs.

In other markets....

June 2 - Clients were recommended to sell the July Euro 150 calls for about 36 ticks.

June 7 - Clients were advised to add to their short Euro call position by selling the 151 call for 37 ticks.

June 9 - Clients were advised to offset the July 151 Euro call near 17 to lock in a profit of about $250 before commissions and fees.

June 10 - Clients were advised to buy back the July Euro 150 call for about 14 ticks to lock in a profit of $275 per contract assuming an entry of 3

(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)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.

Bonds and notes rallied moderately sharply in the face of higher equities and lower safe havens (greenback and gold). There seems to be a transformation in market psychology and more importantly psychology. In the coming days we will know if the timid trade in Treasuries or the risk on trade was the right call.

In the short-run, we have to lean toward some sort of intermediate term top in bonds and notes. The economic recovery is more like Swiss cheese than a building block for the future but that isn't a surprise. The markets have been operating with this knowledge for months (even years) so it doesn't make sense to assume we'll see a sudden influx of fixed income buying at pathetically low rates of interest without some sort of shoe dropping in Europe.

In economic news, the second estimate of GDP was a little weaker than most were expecting at a growth rate of 1.8% but again...nothing shocking here. Similarly, initial claims for weekly jobless claims moved up to 424,000.

The Treasury issued $29 Billion in 7-year notes to an eager group of buyers. The yield came in at 2.429% and the bid to cover a healthy 3.24. The news enabled bonds and notes to turn positive and that seemed to trigger rather swift short covering.

COT data in recent weeks suggests large speculators (smart money?) are adding to short positions in the 10-year note and small speculators are gradually covering their shorts. They might be running out of margin, money or both but it is the small spec category that tends to be getting out when it should be getting in and vice versa.

We've been calling for this move to see the mid 126's in the June 30-year bond future and near (or maybe a little above) 124 in the June 10-year note. At the time of this writing, prices were getting near our targets...accordingly, we will be monitoring trade tomorrow and looking for a possible bearish opportunity.

* 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.

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

Flat

(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)

Carley Garner

Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

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.