Year-End Book-Squaring Operations Create Trading Opportunities

Written by Al Martin Sunday, 13 December 2009 22:25

(12-13-09) First of all, we had warned that there would be year-end pressure on US Government Long Bonds. Indeed we saw that in the auctions last week with the March contract now trading under 118. However do not try to read too much into this, since this is a typical period of weakness, not only for the US Treasury Bonds but indeed the treasury bonds of all countries. We believe that the bonds are a greater buy-on-dip trade than they have been since October and we have been trading the March Long Bonds from the long side.

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Dubai Roils Markets Late Week

Written by Al Martin Tuesday, 01 December 2009 01:58

(11-30-09 We saw sharp rallies in the Dec. Long Bond contract late week turning
above 123 for the first time since last September.  We think the Bonds above 123 are rich and are going to need a further catalyst in order to hang onto recent gains.

The flight to quality rally created in the Dec. Dollar contract already had begun to fade in Friday’s session and likely will continue to fade without fresh tensions arising from the Dubai situation.

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Late Week Volatility Reaches Frightening Proportions, But Presents Record Opportunities

Written by Al Martin Sunday, 22 November 2009 21:33

(11-22-09) We saw the Long Bond contract rally late week, as we had predicted that it would in last week’s missive, and we continued to be friendly toward the Dec. Long Bond contract. We saw the contract trade above 121, and we believe that depending on Asian and Euro-Zone data coming this week,  that the Long Bond contract will trade back to par 22 (122.00). We also had been warning of a short-covering rally coming in the Dollars. Indeed we saw the Dec. (DX) Dollar contract mount its consistent rally efforts late week, being turned back finally at the 7600 level. We believe, however, that a more dynamic short-covering rally is coming in the Dollars. We continue to trade them from the long side on dips.

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Industrial & Fungible Commodities Now Look Tired

Written by Al Martin Sunday, 15 November 2009 22:45

(11-15-09) Good late week trading came into the Dec. Long Bond contract as we got past last week’s series of auctions -- auctions all with good bid-to-cover ratios. The 30-year auction was considered a little weak, simply because of the yield, but the overall series of auctions were rated good or better. That resulted in a relief rally in Friday’s trade with no fresh supply coming next week. We had recommended buying the Bonds early session at 119.02, a trade that we subsequently lifted at 119.16 later in the session. We should note that the Bonds held on to most of their gains. We would expect that the Bond prices will work higher next week as the economic calendar becomes increasingly more friendly to Bonds.

     Dollars fell back Friday after the Thursday rally effort. We are seeing consistent rally efforts now in the Dollar, which is not simply a short trade like it had been. We are seeing a base being built in the Dec Dollar contract around the 7500 level. On a technical basis the Dollar is as oversold as it ever has been -- since they started printing them in 1795.

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