Warming Up With The 3-Year Auction

After a slow start to the news week, traders were able to gnaw their teeth on this afternoons 3-year note auction. However, with the 10 and 30-year auctions and the FOMC interest rate decision looming, the market is bracing itself for volatility.
Today’s auction went relatively well; $37 billion in 3-year notes were met with a bid to cover of 2.89 and a lower than expected yield of 1.78%. Additionally, foreign buyers stepped up their game; the indirect bidder participation was 62.5%.
Much of the recent buying can likely be attributed to short covering ahead of event risk but that doesn’t mean that the move won’t continue. I don’t see any significant resistance in the long bond until 118’18 but 121 doesn’t seem unlikely in the coming week or so. I have been noting seasonal strength during this time of year and caution that fundamentals are often overlooked. Accordingly, traders should hold an upside bias. That is not to say that the short side of the market is off limits, but traders must be patient in their entry to reduce the odds of being caught off guard. Meanwhile, the mid-116’s are pivotal for the note. It will likely take a close above 116’18 to keep the bulls in control of the immediate future. Next resistance lies at 117’20.

Futures traders, keep in mind that just because we don’t put daily recommendations out on this newsletter doesn’t mean that we can’t help you with different and/or more aggressive strategies!
I apologize for the brevity, but I am a bit short on time. My second book is in the production stage and it has me working around the clock. I figure that if the markets don’t have to sleep, neither should I!
*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.
Treasury Bond and Note Futures Trading Recommendations
**There is unlimited risk in trading futures.
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.
Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
Local : 702-947-0701
*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.

Reblog this post [with Zemanta]