End of Week Volatility Creates More Trading Opportunities

Written by Al Martin Sunday, 21 August 2011 22:04

(8-21-11) In overnight Thursday trade action, our 139.08 standing buy order was filled once again in the Sep. Long Bond contract. We were sellers at 140.08 in Friday’s day session, Sep. Long Bonds now reaching a new contract high, establishing a close above 140 for the first time. We are still trading the Bonds from the long side – as long as fear persists.

The Sep. Dollar contract moved up to our 74.30 - 40 target. The Dollars we bought at 73.90, we sold on our standing order at 74.40. We would look to continue to buy the Dollar on dips below 74.00.

Dynamic action in the Sep. Crude Oil contract. We were sellers on our 84.99 sell stops in Friday morning action. We took $2.50 out of the contract by the end of the day. The contract is now closing below $83 once again. We would expect another test of the 79.85 overnight close, as seen in Thursday’s session. We have no doubt that the Oil is going to start to trade in the new lower band.

Dec. Gold contract – explosive moves in Thursday and Friday’s trade. Once again we were buyers of the contract above 1800. The contract provided excellent shorting opportunities when the contract got tired above 1870 in Friday's trade. Our final trade was in fact shorting the contract at 1870, covering at 1850 in late session trade. If the Gold can continue to hold 1850 level, look for 1900 to be reached in early week’s trade.

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Equities & Bonds Both Rally; One of Them Has To Be Wrong

Written by Al Martin Sunday, 14 August 2011 20:49

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(8-14-11) We had bought the Sep. Long Bonds on the Thursday close at 135.07. We were sellers at 136.07, our standing order in Friday\'s trade. We would note that even though equities rallied Friday, so too did the Bonds. One of them has to be wrong. Next week will tell.

 The Sep. Dollar Index continues to trade well around the 74.70 level. We continue to like buying the Sep. Dollars at this level, selling on rallies back to 75.30.

 The Sep. Crude Oil contract was the strongest commodity contract on the board in Thursday and Friday trade. We were sellers of the contract Friday on our standing orders at 86.00, covering at 85.40 on the close. Although the Oil does appear to be strong, it is significantly overbought relative to the Copper in the Oil-Copper spread.

 The Dec. Gold contract – we were consistent sellers of the contract above $1760, taking out $10-20 scalps. We would continue to look at rallies above $1760 as fresh shorting opportunities.

Although Oct. Sugar strengthened in Thursday and Friday’s session, we note that the Sugar is still being turned back on rallies above 28 cents. We continue to be sellers of the Oct. Sugar at 28.00 or better, taking 30-50 point scalps.

Sep. Orange Juice, whose back has been broken, as we reported 2 weeks ago, came down to trade under 1.60, finally prompting some short covering lift. However this is no more than short covering, and the contract will become a sell again on any moves back to 1.70.

Sep. Lumber – we reminded traders of the 216 support area. Indeed mid week the contract did trade down to 215 on intra-day basis before rallying, creating a buying opportunity on the hold at that level. We were buyers of the contract at 217, selling the contract at 224 in Friday's close. However we would look at any rally back to 230 or better as a fresh shorting opportunity.

Grains continue to be well-bid late week. Our 7.0025 buy stop in the December Corn was hit Friday, and we were sellers at 7.14 on the close with our 20 lot order, taking 13 cents out of the contract, basis our 7.01 fill. Beans are now overbought. We overbought above $7 and we continue to look at the Beans as a short trade at current levels.

Sep. Silver continues to drag, relative to the Gold. We were consistent short sellers on rallies above 39.20 and would continue to look at the 39.20 level or better for fresh shorting opportunities.

We had covered our Sep. Platinum on our standing order at 721.50, taking $100 out of the contract. We hope that all of our readers did the same.

Sep. Copper – we were sold several times on our 3.9995 sell stops in Thursday’s trade, taking 3-4 cents out of the contract twice. We like selling the contract in the 4.05 area, as we did throughout the week.

The Sep. Coffee finally found support in the 2.33 area, after coming down to nearly touch its yearly low. However we think the Coffee is now a short again at current levels.

Sep. Cocoa, which broke in line with our prediction, has rallied back above 2900. Action is tepid, however, and we like selling the contract on any further moves to 2920.

Dec. Cotton also had a limit bid move in Friday's session back above a dollar. We continue to like the 1.03 - 1.05 area for fresh shorting opportunities.


 

Late Week News Flows Create Volatility Not Seen Since 1929

Written by Al Martin Monday, 08 August 2011 00:52

(8-7-11) The US Treasury Bond contract, which had a high-low spread in Thursday-Friday session of 5-1/2 points, has been unprecedented at any time since the issuance of the 30-year Long Bond began in 1795.

Also this is volatility not seen since the US Treasury issued its 30-year benchmark Bond, its first issue on May 15, 1795, and not even during the Crash of 1815 and the after-effects of the War of 1812, when the value of US Treasury Bonds was cut in half, not even in that period have we seen such volatility.

It was a 'fear bid' trade which drove the Treasury Bonds. However with the Treasury Bond sell-off Friday, which will continue Sunday night to create a 'buy the rumor - sell the fact' trade, as the S&P downgrade was widely expected. Further Moody's and Fitch's have said they will not issue downgrades of their own. It must be remembered however that Moody's and Fitch's are much more subject to political pressure in Washington than S&P. We will be looking to buiy the Sep. Long Bond Contract at 131.16 and looking to take additionally a half point out of the contract.

Friday's action will also create further downward pressure on the Dollar Sunday night. We would look for the Dollar to become a buy once again in the 7370 area, where it has been consistently a buy. We will be looking to short the cash Euros on any move above 1.4400.


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Treasury Bonds Post Spectacular Rally -- As Default Looms

Written by Al Martin Sunday, 31 July 2011 22:46

alt(7-31-11)  Last week's feature institutional S&P VIX trade, which we are also in, namely LONG the Aug. 20 calls/ SHORT the Aug. 35 calls, continue to generate profits. We will stay with the trade for now…

We had bought the Bonds Thursday night on the close at 126.00, selling them on our standing order at 128.00 in Friday's trade. Bonds traded up to 128.12, before settling back to a 128.05 close. Bonds will continue to be well-bid until a debt deal is reached. Then we will look for a "Buy the rumor, Sell the fact" trade.

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Treasury Bonds Predict Passage of Debt Limit Extension Bill

Written by Al Martin Sunday, 24 July 2011 22:27

alt(7-24-11) Once again we saw the Long Bonds rally in Friday’s trade. We were buyers on our standing order at125.04 early session, as readers would remember, the same place we bought the Bonds last week. We were sellers of the bonds on the close at 125.28, taking ¾ of a point out of the contract.

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