Commodity Trading School Futures Market Summary

SUMMARY OF UPCOMING DATA 12/11/09
8:30 am US RETAIL SALES (0.9%), EX AUTOS (0.5%)
US IMPORT/EXPORT PRICES
9:55 AM US CONSUMER SENTIMENT (68.2)
10:00 AM US BUSINESS INVENTORIES (-0.2)
DATA RESULTS 12/10/09
US INTERNATIONAL TRADE (-32.9 B VS.-$36.4 B)
WEEKLY JOBLESS CLAIMS (474 K VS. 460 K)
EIA INVENTORY # NAT GAS. (-64 BCF)
US 30 YEAR BOND AUCTION ($13B) BID TO COVER 2.45, YIELD AWARDED 4.520 %
U.S. Debt Review and Outlook
US TREASURIES continued their slide on Thursday, with the long end of the yield curve hitting the worst levels of the session after results of the US 30 year Treasury auction posted disappointing results. The weak bid to cover of 2.45 continued to demonstrate investors continued reluctance to commit funds for extended periods in the wake of potential recovery and inflation due to the record liquidity which has been pumped into the market place. The yield spread between US 2 and 30 year debt widened to its greatest level since 1980 (remember interest rates at that time?).
Treasuries backed off their lows as shorts took profit, applying the “sell the rumor, buy the fact” strategy in a classic pattern. Experience suggests that traders may be expecting continuation of short covering going into the weekend as trading volumes decline going into the end of the year.
Technically, 30 year futures broke through bottom end of range at 118-24, moving through downside target of 118-04. New resistance sets up at 118-28, with 119-11 setting up as possible upside target. Remain bearish on the contract, with 117-17 setting up to next target on the downside. A break of this level could lead to move down to 116-12.
U.S. Equity Review and Outlook
US EQUITIES recovered ground, following European indices higher, as the markets appeared to digest sovereign debt concerns for the time being. Trading volumes were extremely light as end of year squaring of positions and short term trades take hold of market sentiment.
Thursday’s trading activity was defined by tight range trading, covering of recent short positions, and conservative bargain hunting. It appears that the lack of volume allowed for buyers to try and keep the tradition of end of year optimism alive. Data outlook was mixed today, as a jump in weekly jobless claims was offset by a lower US trade deficit figure. A report on US net worth of households rose for the second time in the 3rd quarter.
Most sectors were up on bargain hunting. The major exception was the financial sector, as uncertainty dogged the sector as traders await details on Citigroup’s tender of new equity to raise funds to pay back its TARP debt. The uncertainty centers on the amount of new equity or “How I should stop worrying and see how much my Citigroup shares will be diluted (or hobbled).
Equity futures undergo roll on Friday, with March futures on the major indices going lead.
Technically, December S&P futures traded to initial resistance level of 1103.00. Expecting market to enter period of narrowing range. Still see 1113.00 as a key resistance level, with a break allowing for potential try at 1122.00. Support sets up at 1092.00, with 1087.00 downside target.


Prepared by Rich Roscelli & Paul Brittain.
Please email questions or comments to: rich@binvstgrp.com
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. Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. 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.