DeCarley Trading Bond Bulletin

1-866-790-TRADE

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.

July 26, 2010 at 1:17 pm • Posted in General

Risk trade….OFF! (0)

July 21st, 2010

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Risk trade….OFF!

Investors clamored to Treasuries as many of them are rethinking the “risk trade”. Money is clearly moving toward safe havens such as the U.S. dollar and the U.S. backed fixed income products…particularly short-term instruments.

Most of the day’s buying came on the heels of testimony by Bernanke that suggests a largely uncertain economic outlook and low inflation (a bit short of deflation) and given the proposed budget cuts supply concerns have been put on the back burner. Even if large auctions continued Bernanke reassured the markets that foreign demand for Treasuries remains strong.

All in all, Bernake’s statements weren’t necessarily shocking nor were they new. Nonetheless, the day’s events were overall bullish for bonds and notes. Therefore we feel as though we could finally reach our upside target in the September bond futures of the mid 129’s to 130ish and just over 124 in the 10-year note. Like we said yesterday: “Nobody has a crystal ball, but the environment is ripe for a bull trap. It seems somewhat likely that Treasuries could see some sort of spike high as buy stops are elected but we doubt that any large gains would be sustainable.”

If you have been patiently waiting to play this market from the downside, the mentioned areas should be a good place to start.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already 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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

July 21, 2010 at 2:52 pm • Posted in General

Treasury futures retreat…but slowly (0)

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Treasury futures retreat…but slowly

Although bonds and notes have suffered in recent sessions, the selling has been relatively tame given action seen in the surrounding financial markets. The recovering Euro and stock market “should” have had a more profound impact on Treasuries. The lack of bearish sentiment leaves us scratching our heads.

The 10 year note traded above 3% for the first time in some time but according to Freddie Mac, 30-year fixed rate mortgages fell to another record low average of 4.57% from 4.58%. The 1-year adjustable dropped to 3.7% (hopefully nobody falls for this).

In economic news, initial claims for unemployment benefits fell to 454,000 to post a better than expected figure.

Helping to keep Treasuries afloat, demand for low yielding, but nearly guaranteed, Treasuries continues to be evident. Today’s $12 billion auction of 10-year notes drew 1.295% with a bid to cover of 2.88.

Don’t forget, that with the G-20 pledge to get government balance sheets under control there is less concern over supply (excessive Treasury auctions). The market seems to have taken this promise to heart, and that could also be part of the explanation for hovering prices.

We still favor the short side of the market, but have scaled back our conviction; if you are sitting on open shorts with a profit…scaling back, tightening stops, etc. is probably a good idea. In the meantime, the first “good” support lies at 125′09 in the long bond futures and near 121 in the note.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already 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.

June 29 – Clients were advised to sell the August 131 Bond calls for 26 or better

July 6 – Our clients were advised to close their short August Bond 131 call position near 10 or 11 (most fills were reported at 11). This locks in a profit of $234 per contract.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

July 8, 2010 at 1:03 pm • Posted in General

Counter-trend Friday, can’ we get follow-through Monday? (0)

Follow Carley of DeCarley Trading on Twitter http://twitter.com/carleygarner

Counter-trend Friday, can’ we get follow-through Monday?

Treasuries were under pressure ahead of the non-farm payrolls data and the theme continued throughout the session despite slightly disappointing news. We use the term slightly because the numbers were poor, but weren’t as poor as many traders had positioned for.

The government reported a loss of 125,000 jobs last month, with most of that being attributed to laid off census workers. The private sector managed to add 83,000 jobs. The unemployment rate fell to 9.5% but the news isn’t as optimistic as it seems given the fact that many have simply dropped out of the job-search category.

As we mentioned yesterday, although the markets have been dowsed with negative fundamentals, it is highly possible that the bad news is already priced into asset values. Accordingly, the market is vulnerable to a large correction as fresh buying dries up and longs take profits.

We favor a sell into rallies strategy for now, but this does not mean that you should be chasing the market lower. If you want to be a bear, make sure you enter at “good” prices. We see resistance just over 128 and then again near 130 (trend line which we prefer not to see). In the meantime, our first downside objective will be just over 125. If you are trading the note, look for resistance near 123, and then again at 123′20 (which we aren’t counting on). The first downside target in the note will be just over 121.

Remember… He who goes forth on the 4th with a fifth, rarely goes forth on the fifth….

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already 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.

June 29 – Clients were advised to sell the August 131 Bond calls for 26 or better

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

July 2, 2010 at 1:19 pm • Posted in General

Horrible housing data and a “do nothing” Fed (0)

Follow Carley of DeCarley Trading on Twitter http://twitter.com/carleygarner

Horrible housing data and a “do nothing” Fed

Bonds were bid most of the day on weaker equities, turrrrible (as Charles Barkley would say) new home sales figures and stable Fed policy.

The latest data on new home sales was a huge miss of expectations. The consensus forecast was 430,000 sales but the actual number was reported to be 300,000. As ugly as the headline looks, a little digging beneath the surface suggests that the numbers are “stable” overall. Essentially, sales were borrowed in previous months from the current month (and upcoming months) as a result of the home buyer tax credit. That is not to say that the housing market isn’t in shambles, but it should diminish some of the shock value that today’s numbers brought with them.

As expected, the Fed pledged to keep the target overnight rate at historically low levels. Without signs of inflation, a real estate market under pressure and lagging job growth there is little incentive to adjust monetary policy.

The Euro picked up following the Fed announcement and if this continues, it should keep a cap on the rally.

The lack of volatility makes trading Treasuries very difficult; whether you prefer the long or short side of this market the tight range has likely enabled the accumulation of stop orders. Accordingly, there could be false breakouts and for those that are “suckered” into buying a bull or bear trap could experience a painful squeeze.

We have a ‘feeling’ that the 30-year bond could trade in the mid-126 to 127 but can’t help but grow bearish at such levels. The bias is upwards but we doubt that stocks will completely break down again and that should prevent the Treasury rally from growing legs.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already 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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

June 23, 2010 at 1:04 pm • Posted in General

Bonds and gold soar, but stocks don’t sour (0)

June 17th, 2010

Join us for a FREE webinar hosted by PFG Best on July 29th at 3:30 pm Central to discuss “Futures Market Slang” : http://pfgbest.com/webinar/eventSummary.asp?skey=337713234

Bonds and gold soar, but stocks don’t sour

We have been complaining about a lack of economic data and today we got what we were looking for. The morning was filled with news, albeit disappointing. Weekly jobless claims were 472,000, up from consensus 150,000 and the Philly Fed index was reported at 8; less than half of expectations. Leading indicators were only a small miss at .4%. Inflation remains under wraps, this isn’t a bad thing but it is bond bullish. CPI was reported as a draw of .2%.

As a result, investors seemed to be looking to “safer” assets. However, the safety phenomenon wasn’t spread throughout all of the financial markets. For instance, Gold prices saw a record close at 1247.70 on the day and the long bond traded over a handle higher than the previous day’s close for much of the day. On the other hand, the currency markets didn’t comply with the day’s safety theme. Dollar buyers were scarce and the Euro continued to make its way higher.

As predicted in yesterday’s newsletter, the short squeeze in the Euro extended into today. However, our expectations for a higher Euro/lower Treasury scenario didn’t play out. The new disconnect between currencies and Treasuries is a bit suspect and leaves our analysis less convincing we originally thought.

Let’s face it, Treasuries have been going nowhere fast and with tomorrow’s stock option expiration, end of week trade and what is expected to be incredibly low volume, just about anything is possible.

We doubt that the recent decline in volatility will last. If you are a short option trader in Treasuries, we suggest you take profits (if possible) and move to the sidelines.

We see near term resistance in the September 30-year bond futures at 126 and support at 121′23.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already 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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

June 17, 2010 at 12:59 pm • Posted in General

The safety trade is back! (0)

June 4th, 2010

We hope to see you at the trader’s expo!! Join Carley to discuss trading commodities “like a girl”, register for free by clicking here.

The safety trade is back!

A much weaker than expected employment report forced investors to rethink their overall strategy; as a result, money immediately flowed out of equities and into Treasuries.

The headline non-farm payrolls number came in at 431,000, which in more normal circumstances would have been a success. However, it is estimated at 411,000 of those were temporary government hires (Census workers). Adding salt to the wounds of the economic bulls, the previous month’s figures were revised lower. The employment rate did come in a little lower than expected, but let’s face it…whether it is 9.9% or 9.8%, it is still rather devastating. I can’t help but recall the Super Bowl player that was interviewed earlier this year and in regards to the unemployment rate stated something along the lines of… “Only 10%, that’s it? What is everyone crying about?”

News of Hungarian debt problems were also a driving force behind the Treasury rally. To make things worse, there were rumors circulating about a big European bank on the verge of collapse.

A tumbling Euro also worked in favor of bonds and notes. As investors scramble to move money out of Euro and into dollars, the most logical parking place is U.S. government fixed income…and some were buying gold.

Thursday’s plunge did shake up our bullish bias a bit, but as it turns out we were right the first time. The September bond looks to be headed toward 125ish, in the meantime look for support at 122′28 and then again near 122ish. Depending on the feel of the market, we will likely be turning bearish at the noted resistance area but a complete retest of the recent highs is a real possibility.

If you are trading the note, resistance comes in near 121′09 but the high 121’s isn’t out of the question.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

June 4, 2010 at 2:34 pm • Posted in General

Yields soar as flight to quality squashed (0)

May 27th, 2010

Check out the Futures Magazine review of “A Trader’s First Book on Commodities” by Carley Garner

http://www.futuresmag.com/Issues/2010/June-2010/Pages/A-Traders-First-Book-on-Commodities-An-Introduction-to-the-Worlds-Fastest-Growing–Market.aspx

Yields soar as flight to quality squashed

An overdue recovery in the Euro and U.S. equity markets lured money back into risky assets and away from the safety of Treasuries. One day does not make a trend, but this seems to be the beginning of some attempt at “normalcy”.

We have been getting solid economic news recently despite a few minor disappointments in this morning’s data. The latest revision to the first quarter GDP was reported at 3%; a bit less than the expected 3.2%. Similarly, weekly jobless claims remain stubbornly high. According to the Labor Department, last week’s claims for unemployment benefit was 460,000.

The Treasury markets have spent their seasonally bearish months rallying, and this makes speculation going forward very difficult. In a typical year, bonds and notes should have traded weaker for much of April and May and would be “looking for a bottom” in early June. However, with bond and note prices so elevated it is difficult to imagine that the seasonal lows will be put in sometime in the next week.

Completely ignoring seasonals, it seems as though the financial markets might have turned the corner for now. We feel like the June Euro futures has the potential to see a very large short covering rally (maybe as far as the high 120’s). Similarly, the S&P shouldn’t run into strong resistance until we see the high 1120’s or mid 1130’s. Assuming that we are correct, that should put continued pressure on Treasuries in the near-term. We see the first area of support in the September 30 year bond futures just under 121 but if we get some follow through, as low as 117 is possible by late next week.

If you are a bear that has been struggling to scratch on a short trade, it might be a good idea to unload some of your risk. Counter-trend Friday and a three day weekend poses a risk to the market’s bearish tone.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

May 27, 2010 at 2:57 pm • Posted in General

Supply on tap, but can Treasuries get over Europe? (0)

May 21st, 2010

See Carley at the Trader’s Expo in LA, join us on June 11th to talk about “Trading Commodities Like a Girl” https://secure.moneyshow.com/msc/caot/registration.asp?ts=t&sid=caot10&newReg=t&scode=018859

Supply on tap, but can Treasuries get over Europe?

Earlier this week we urged all of our clients to get flat Treasuries because things didn’t “feel” right and they still don’t. Treasuries have managed to maintain an upward bias in the face of higher equities (the few bounces that we have gotten), a recovery in the Euro, this signals that there are some behind the scenes forces that are carrying a bit more weight such as emotion.

When markets become emotional, they are nearly impossible to predict. Let’s face it, humans are unpredictable and market prices are the result of the conglomerate of human reaction to news and events. That said, under most circumstances I believe that the Treasury markets tend to maintain their composure much better than equities do. As a result, bonds and notes are often late to react to the equity and currency markets; accordingly, we don’t feel as though being short Treasuries has the risk reward prospects that we would like to see. Perhaps sitting on the sidelines is the best position for now.

The economic calendar for next week will be thick and might be what the markets need to get their heads off of Europe. We can’t deny that a credit crisis overseas wouldn’t be devastating for domestic markets but we also can’t assume that European leaders won’t make the reform necessary to mitigate the pain. If you have to play Treasuries, you should likely have a bearish bias but you want to keep risks low and don’t overstay your welcome. Friday’s highs should stay intact for now; if so, support in the 30-year comes in near 123′27 and then again near 123′04. Good luck!

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

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.

May 21, 2010 at 12:21 pm • Posted in General

30-year auction sucks bid out of market (0)

May 13th, 2010

See Carley at the Trader’s Expo in LA, join us on June 11th to talk about “Trading Commodities Like a Girl” (http://www.moneyshow.com/caot/WorkshopDetails.asp?wkspid=C0F78BEC175A43A68A939CAB488E0235)

30-year auction sucks bid out of market

Bond and notes moved higher in early trade as equities struggled. After two consecutively strong Treasury auctions, and questionable fundamentals in overseas fixed income markets, the traders were anticipating strong demand for the 30-year.

Lofty expectations seemed to have just set the market up for failure. In post-auction trade, the long end of the curve dipped well into negative territory. The $16 billion issue of bonds went off at a higher than expected rate of 4.49%, a bid to cover of 2.6 and an indirect bidder take of 32.5%. Nonetheless, the selling was temporary and Treasuries migrated back to unchanged.

In economic news, weekly jobless claims were slightly worse than expected. However, the week’s most notable data will be released tomorrow. We will start off the day with retail sales and then a little later in the morning we will have the Michigan Sentiment index and business inventories to digest.

Not much has changed, so we are holding with yesterday’s commentary:

Based on action in other markets, we believe that the June T-Bond futures “should” have traded down to 119. This is a bit discouraging, but we are still looking for about 118′23 in the coming sessions. This would equate to about 118 in the June T-Note futures. Good luck!

That said, we expect low volume tomorrow and a counter-trend move is possible. If you are sitting on open profits, you might want to lighten up or even flatten out…especially if we see early morning weakness.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**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.

April 22 – Our clients were advised to sell the July bond 121 calls for 22 or better, and were filled this morning on the rally.

May 7 – Clients were recommended to buy back the July 121 calls and sell the July 124 calls instead. The swap was done at a debit of 1′20 and left some money on the table but the goal must be capital preservation at this point.

May 10 – Clients were advised to sell the July 115 put for 36 or better

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

1-866-790-TRADE

Local : 702-947-0701