Look for Early Week Back-Off in Spoos Before FOMC
Written by Al Martin Sunday, 22 April 2012 23:25
(4-22-12) We are looking for a back-off in the June Spoo contract prior to the Wednesday afternoon FOMC pronouncements. Market participants believe that another shot of Hopium is necessary in order to solidify the “risk-on” trade. It’s important that the Fed put QE 3 back on the table, or at the very least, an extension of Operation Twist. Otherwise Spoos will back off 20-30 handles.
The June Long Bond contract -- we continue to trade from the long side on dips, although the contract does start to look tired now above 142.16. Nevertheless we are still buying the contract on dips back to 141.26 and would continue to do so up until Tuesday’s trade.
The June Dollar index continuing to find support around the 79.30 level. Look for Dollar weakness if FOMC comes in with a shot of Hopium.
Bond Bears Beware: The Bulls Ain't Done Yet
Written by Al Martin Monday, 16 April 2012 01:22
(4-15-12) In Friday’s trade, we saw once again a gain of a point and a quarter in the June Long Bond contract. We had been buyers the night before at 140.16 and were sellers at 141.16 on our standing orders in Friday’s trade. With the June Bonds closing the near session highs in reaction to the sell-off in the SPM contract, which gave up additional ground in the market session. We are carrying our short SPMs off of our 1369.75 sell stop. We’ll be looking to cover on a test of 1350 in the coming week’s trade.
The June Dollar Index continues to move above 80.00. We continue to expect that the 1.3050 recent lows in the June Euros will not hold and that June Dollars will be able to march up to 81.00.
May Oil -- we continue to be short sellers of the
May Oil at 103.50 or better. Once again Oil marching up as global Oil supplies
continue to swell and demand continues to contract. We think the Oil is at
least $5 overbought at current levels.
Global Market ‘Topping’ Action Continues to Build
Written by Al Martin Sunday, 08 April 2012 21:46
(4-8-12) Late week we saw the June Long Bond contract continue to recover, with the contract going out above par 38 (138.00) on Thursday’s close. We had bought the Bonds on Thursday’s close in anticipation of a weaker monthly unemployment number on Friday. Despite holiday trading, electronic markets were still open and indeed we saw the bonds trade up to par 38.28 off the back of the weaker numbers. We were also short the June S&P contracts, going out of Thursday’s trade, at 1392.50, which we covered on our standing order at 1375, as the S&Ps fell back off of Friday morning’s generally disappointing number. We would expect the European markets to respond accordingly in Sunday’s overnight trade.
Late Week Portfolio Window Dressing Activity Creates New Opportunities
Written by Al Martin Sunday, 01 April 2012 21:46
(4-1-12) In Monday and Thursday trade, we saw the June Long Bond contract continue to move higher, even in sessions where equities also moved higher, as end of quarter short covering came into the US Government Bond market, prompted by those who had been selling Bonds prematurely. We still like trading the June Long Bond contract from the long side. Indeed we bought the contract in Friday's close at 137.26, where the contract dropped a whole point, as short covering buy-in was relieved in late Thursday session. We would look to be sellers of our position on a retest of 138.10 in Monday's trade.
The June Dollar contract continues to hover, just under 80, at surprising Euro strength. Also the end of quarter book-squaring phenomenon persisted. However we would expect the June Euro contract to begin to fall back in the coming week's trade and conversely the June DX contract to rise once again above 80.00.
The May Oil contract -- pressured late week under increasing speculation that there will be a global strategic petroleum release of as much as 100-200 million barrels. Oil is also being affected by record inventory builds in the industrialized countries and falling gasoline and nat. gas demand. We think that the 102.78 Friday intra-day low will be breached in the coming week’s trade.
We Told You to Trade the Bonds from the Long Side!
Written by Al Martin Monday, 26 March 2012 13:49
(3-26-2012) Despite the numerous pundits in financial media who pounded the bearish drum on Bonds throughout the week, we continue to trade the Bonds from the long side on dips, a strategy that proved successful throughout the week, as the Bonds continued to regain lost ground. The Bond bears are wrong. There is not a fundamental shift coming. In order for this shift to take place, there has to be the belief that the US is in a 3% GDP growth environment -- which is untrue. We would continue to trade the June Long Bond contract from the long side and would be looking to get long again on a retracement back to 137.16.
The Dollar bears out in force again last week, as the Euro continued to pick up a little steam. The Euro is now topping at the 1.3250 level. We continue to short on any moves above that, covering on any 30-40 point dips. We would expect the June DX contract to move back above 80 in the coming week’s trade.
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