Recently in derivatives Category
The September U.S. dollar index futures are presently in a seven-week-old downtrend on the daily bar chart and prices just hit a fresh three-month low. The bears have the solid near-term technical advantage and have gained more downside momentum this week. See at the bottom of the chart that the Directional Movement Index (DMI) has a green ADX line reading of 35.11. Any ADX line reading over 30.00 does suggest a strong price trend is occurring in a market. The path of least resistance in the U.S. dollar index remains sideways to lower. See the near-term technical support and resistance levels on the chart. Stay tuned! Jim Wyckoff
The financial markets have been nothing short of a high speed roller coaster with light volume, earnings season and macro economic uncertainty as the culprits. Yesterday, investors staggered out of equities and allocated money into bonds and notes but today was the polar opposite.
Today's data was weak, but not enough to encourage more buying. Initial jobless claims were up last week and existing home sales were down last month. However, home sales projections were expected to be lower due to the expiration of the government tax credit.
Bernanke underwent a question and answer session before the House and managed to nearly retract most of the pessimism spewed yesterday. This helped to promote the intraday trend of lower Treasuries and higher stocks.
The Treasury announced its upcoming auction figures and the size of the offering seems to be slightly shrinking. They will sell $25 billion in 1-year notes, $38 billion in 2-year notes, $37 billion in 5-year notes and $29 billion in 7 year-notes. This keeps supply concerns as an afterthought.
Was that the spike high we were looking for? It could have been. Our original expectations were for a bit over 129 but later revised it to the mid-129 to 130 range. Yesterday's trade fit the pattern and may indicate the near term highs are in. That said, picking an exact top is tricky and there seems to be some risk of another spike to 130ish...so be careful not to chase the market lower; you could get chopped!
* 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 Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
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.
A massive short squeeze in equities sucked the bid away from Treasuries. With little fresh fundamental news to work with, this was the primary driving force behind the day's trade.
If it weren't for the volatility, these markets would be snoozers. There is little news and light volume...and this makes our job tough. Accordingly, we'll keep today's newsletter light and unfortunately repetitive. We were sticking with yesterday's comments:
We favor a sell into rallies strategy for now, but this does not mean that you should be chasing the market lower. If you want to be a bear, make sure you enter at "good" prices. We see resistance just over 129 and then again near 130 (trend line which we prefer not to see). In the meantime, our first downside objective will be just over 125. If you are trading the note, look for resistance near 123'20, and then again just over 124'00 (which we aren't counting on). The first downside target in the note will be just over 121.
Our clients were advised to close their short August Bond 131 call position near 10 or 11 (most fills were reported at 11). This locks in a profit of $234 per contract.
* 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 Trading Recommendations
**There is unlimited risk in naked option selling.
June 29 - Clients were advised to sell the August 131 Bond calls for 26 or better
July 6 - Our clients were advised to close their short August Bond 131 call position near 10 or 11 (most fills were reported at 11). This locks in a profit of $234 per contract.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
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.
Treasuries soared overnight to fresh highs but were unable to hold the gains. The 30-year bond futures traded comfortably near unchanged for the majority of the session to make the last day of the second quarter a non-event.
Payroll processor, ADP, reported that the U.S. economy gained only 13,000 jobs last month. This was a far cry from the previous 57,000 and the expected tick higher to 61,000.
The disappointment doesn't bode well for the governments take on the employment numbers due Friday morning. However, today's reaction to ADP might have paved the way for a Treasury unfriendly payroll report regardless of the numbers. This is because with expectations so low, it might take a complete employment disaster to simply keep Treasuries afloat.
Chicago PMI was reported near expectations and seemed to enable equities to hold firm and Treasuries to back off of early morning bids. The Index last month was calculated to be 59.1. Nonetheless, it is simply a speed bump in the way of Friday's figures.
Treasuries still feel heavy up here, but the longer they hover the greater the odds of another run at new highs. We feel like a potential reversal could be on hold until post payrolls. We like the idea of fading a Friday morning rally, if it occurs.
Look for resistance just over 128 in the long bond and 123 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 Trading Recommendations
**There is unlimited risk in naked option selling.
Flat
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
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.
A supportive inventory report aided energy prices today with Crude oil and the distillates putting in another positive showing. We feel prices are overdue for a setback so we advise tightening up stops and lightening up on longs. On a pullback we would not expect much more than $3-5. At that point we would be a buyer again for clients. With natural gas prices unable to push thru $5.20 this could be day one of the pullback we had anticipated. A 38.2% Fibonacci retracement would also fill the gap from Friday we mentioned yesterday. We will be looking to be a buyer of September for clients if prices come off an additional 4-6%. We expect another 20-30 points higher in the S&P but think the 50 day MA at 1140 could be a significant hurdle.
If October sugar trades above 16.50 in the balance of this week we will be working out of most of our clients remaining longs. Risk to reward we still like the idea of short exposure in December cotton with tight stops or put options. September 30-yr bonds will close below the 20 day MA for the second day in a row but we've expected more of a breakdown. It may take the last gasp of air from sock traders to break Treasuries. Clients remain in bearish positions expecting 120/121 in September 30-yr bonds. Continue to work long December live cattle via futures and options. We suggest light exposure ahead of Friday's Cattle on feed report and then we will be adding to positions next week as long as we get no curve-balls on the report.
Sideways congestion in gold and silver as metal traders are trying to figure where from here? If we see new highs in gold and buying does not come into the market we will be offsetting those positions in the next few sessions. Stay tuned and we will let you know the outcome if we make a move for clients. Most clients have bullish exposure to silver but are growing impatient of the non-action. Those carrying large positions long corn we advised to establish some hedges or to lighten up on their longs taking some money of the table. We think there is more upside but we could get a setback in the short term.
We pulled back the order on the wheat we mentioned in recent commentaries; buying CBOT wheat and selling KCBOT wheat. Not because we do not like the trade...we do. We need to exit other positions before feeling comfortable gaining more exposure for clients. Traders could have been filled at our suggested limit today (25 cent premium to KCBOT). We suggest risking 8-10 cents looking to make 20 plus cents on the spread. Clients remain long the Euro expecting 1.2600, short the Yen expecting a trade below 1.08 and we put on a trade in the Loonie for some clients today. We think the upside should be capped at .9850 and could see prices give back after the 4.25% appreciation in the last week. Clients went short futures and sold puts against their position with an initial target of .9600.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
Monday's horrendous close had the bulls nervous and the bears salivating, but despite a lack of positive news or obvious catalyst Tuesday belonged to the bulls.
I recently read an internet blog that shared the same pessimistic reality that I have spoken about in this newsletter from time to time. It stated that based on the open interest of calls and puts in the SPY (the ETFy version of the S&P 500 index) the S&P would need to be a little above 1100 at expiration to cause the most pain to the most speculators and this is what the blogger expects to happen.
Unfortunately, I agree; I believe the markets have a tendency to cause the most amount of pain to the most people. Don't forget that beating the market is a tough game...greedy investors chased Madoff and his 12 to 13% annual track record straight into prison, so expecting "easy" money is unrealistic. I am not saying that profitable and lucrative trading isn't possible, but it is my job to point out that as a trader it is important to be able to accept the good with the bad. That said, although our conclusions were made via different analysis relative to this blogger, the outcome is the same.
We have been looking for the S&P to trade into the 1120's and maybe as high as 1130. Today's test of the 200-day moving average (near 1108) puts us well on our way. However, President Obama will be addressing the country tonight and he has been called by some un-named CME floor traders "Mr. Sell Signal". Therefore, if you have caught this up-move don't get greedy holding out for 1130...look to tighten stops and take some risk off of the table. Assuming we break 1108, the next resistance will be 1117 and then again near 1127. There are likely many buy stops above and this should translate into an extension of the rally but he bulls shouldn't get comfortable.
If you are trading the NASDAQ, resistance lies near 1905 and again near 1930.
Resistance in the Russell continues to be 661 but we think that 675 will be seen sooner rather than later.
* 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.
Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.
S&P 500 Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
May 10 - After several adjustments, and challenging market conditions, our clients have been recommended to hold the short June 1100 puts. We are underwater considerably on the position but hope to be able to recoup as the market stabilizes.
May 20th - Clients were recommended to roll the June 1100's into the June 970 and the July 970. Doing so enabled them to recoup most of the premium, while giving the market some breathing room and keeping some exposure in the faster eroding June options. However, for this move to work we need lower volatility!
May 26th - Clients were advised to buy back the June 970 puts at a profit, we will hold the July's for now.
June 12 - Clients were advised to buy back the remaining July 970 puts for about $10, to lock in a profit on that leg of the trade of about $1000. It feels good to be on the sidelines.
Russell Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.
NASDAQ Futures and Options Trading Recommendations
**There is unlimited risk in naked option selling and futures trading
Position Trade -
Flat
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
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.
To me virtually everything is trading of the indices so look to the equity market for guidance and positioning. Crude was higher but I'm not convinced the damage is done just yet. If the 9 day crosses the 20 day which would mean prices would be $1 higher in futures I will likely get clients positioned long again. Much of tomorrows action will depend on the inventory report...stay tuned. We suggest backing off on the distillates until Crude oil picks a direction. Natural gas failed to get thru $5 today closing down 2.30%. At this point we're feeling a correction back to $4.40-4.60 should be bought.
We will have specifics in August and September contracts if we do get that retracement. The fact that indices made a new low and failed to follow thru we should get a bounce from here...a dead cat bounce. We would start to explore shorts in the S&P above 1180 but if lucky we may get an opportunity to be a seller back above 1100 for clients. IF the equity market for whatever reason stabilizes and trades higher that should bode well for some of the beaten down commodities...stay alert.
Sugar was higher by 3.84% today closing in on 15 cents. Clients remain long October expecting another 7-13%.Futures traders are advise. The dollar looks heavy but we would need to see confirmation to add any additional exposure for clients. As it stands now some of our clients are long the Aussie and the fact that .8100 held today they have chance of seeing a trade back to .8500-.8700 in the coming weeks. The Swissie looks like a buy as well; aggressive traders should get long with stops under .8575. A 38.2% Fibonacci retracement would lift prices to .8940.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
An overdue recovery in the Euro and U.S. equity markets lured money back into risky assets and away from the safety of Treasuries. One day does not make a trend, but this seems to be the beginning of some attempt at "normalcy".
We have been getting solid economic news recently despite a few minor disappointments in this morning's data. The latest revision to the first quarter GDP was reported at 3%; a bit less than the expected 3.2%. Similarly, weekly jobless claims remain stubbornly high. According to the Labor Department, last week's claims for unemployment benefit was 460,000.
The Treasury markets have spent their seasonally bearish months rallying, and this makes speculation going forward very difficult. In a typical year, bonds and notes should have traded weaker for much of April and May and would be "looking for a bottom" in early June. However, with bond and note prices so elevated it is difficult to imagine that the seasonal lows will be put in sometime in the next week.
Completely ignoring seasonals, it seems as though the financial markets might have turned the corner for now. We feel like the June Euro futures has the potential to see a very large short covering rally (maybe as far as the high 120's). Similarly, the S&P shouldn't run into strong resistance until we see the high 1120's or mid 1130's. Assuming that we are correct, that should put continued pressure on Treasuries in the near-term. We see the first area of support in the September 30 year bond futures just under 121 but if we get some follow through, as low as 117 is possible by late next week.
If you are a bear that has been struggling to scratch on a short trade, it might be a good idea to unload some of your risk. Counter-trend Friday and a three day weekend poses a risk to the market's bearish tone.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
1-866-790-TRADE
Local : 702-947-0701
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com
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.
Subscribe to this Feed