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

Treasuries on pause for Greece resolution

June 17th, 2011

Check out the latest Futures for You column in Stocks & Commodities Magazine featuring, DeCarley’s Carley Garner!

Treasuries on pause for Greece resolution

Semi positive news out of Europe, higher stocks and strong comments made by Federal Reserve member Fisher all worked against bonds and notes going into what could be an eventful weekend.

Fisher reiterated the need for U.S. legislators to reduce the debt load and confirmed that QE2 is coming to an end.  He also noted that the Fed won’t print money to compensate for an unfunded government.  Although there is nothing new here, it probably triggered the liquidation of some longs that were speculating on the off-chance of a QE3.

The day’s news was relatively mixed.  Michigan Sentiment was reported at a weaker than expected 71.8 but Leading Indicators beat forecasts considerably.  We are looking forward to an action packed week; the FOMC interest rate decision will be on Wednesday and we will hear the latest stats on new home sales and GDP on Friday.  However, it feels as though economic news will be taking a back seat to Greek bailout news.

In our opinion, Treasuries are both technically and fundamentally overbought.  A client pointed out that this has been the longest string of weekly declines in Treasury yields since the mid 1980’s.  That fact doesn’t guarantee we will run out of buyers at some point in the near future, but it certainly suggests that the odds favor it.

With this in mind, we prefer to play from the bear side of things but can’t ignore the fact that seasonal tendencies are bullish and investors are nervous.  That said, we’ll go into the weekend with a relatively neutral bias but with the idea that any sharp rally early next week could be a place to establish a bearish position.

Volatility will likely continue well into next week;  look for resistance in the September 30-year bond in the mid 127’s and near 125ish 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.  

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations

**There is unlimited risk in naked option selling.


In other markets….

June 15 – Clients were advised to sell the August S&P 1120 puts for 9.50 in premium (or $475 per mini contract).

June 17 – Clients were advised to sell the August crude oil 81 puts for about 45 cents ($450).

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more.  Email us for more information)

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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