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DeCarley Trading Bond Bulletin
Stocks & Options Trading Newsletter | Carley Garner

Higher dollar and lower stocks favor Treasury rally

January 20th, 2010


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Higher dollar and lower stocks favor Treasury rally


It was the perfect environment for a Treasury rally, and they did.

Bonds and notes moved higher on Tuesday as equities gave back yesterday’s gains and the U.S. dollar surged higher. 


Additionally, the days economic data was overall supportive for fixed income products.  The December housing starts were a minor miss, leaving the housing market on a virtual teeter totter as the data seems to be good one month and dire the next. 


The Producer Price Index was slightly hotter than expected, but much cooler than the previous readings and this allowed the inflation worries to be put aside in the near-term. 


Tomorrow’s calendar should be action packed, we will hear about the weekly jobless claims, leading indicators and the Philly Fed index.  However, there are no economic releases scheduled on Friday.  This leaves the market vulnerable to counter-trend Friday trade which seems to be in favor of a sell-off. 


In yesterday’s newsletter, we were calling for the mid 118’s in the bond and just under 118 in the 10-year note.  We still feel that these prices are possible, but prefer the short side from such levels.  Our clients were recommended to sell call options this morning against the rally.  Specifically, we like the idea of being short the March 30-year bond 121 calls.  Fills were being reported anywhere from 23 to 26 ticks or $395 – $406.  The longer-term seems to point higher but the 10-year notes are overextended and they have been the leader.  Should the market correct in the coming sessions, we like the idea of being quick to exit this trade at a profit.  Stay tuned.



* 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.


January 20 – Our clients were recommended to sell call options this morning against the rally.  Specifically, we like the idea of being short the March 30-year bond 121 calls.  Fills were being reported anywhere from 23 to 26 ticks or $395 – $406.


Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.





Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading


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.

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