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Bond rally nearing an end?
- Thread starter gharghur2
- Start date
Everyone was afraid of hawkish inflation talk buried within the minutes and the fact the supply began today so longs took a few profits after Consumer Confidence. 2yr auction was actually decent and then Goldman vol selling hit about 5 minutes before the FOMC Minutes were released. We found the Fed basically offered nothing new and it still is data dependent. Curve didn't really steepen, so not sure if the front end has quite thrown in the towel on shorts. Watch out for huge month-end index duration extension (.21 yrs, fairly large) front-running starting tomorrow and most of Thursday.
Quote from mcurto:
Everyone was afraid of hawkish inflation talk buried within the minutes and the fact the supply began today so longs took a few profits after Consumer Confidence. 2yr auction was actually decent and then Goldman vol selling hit about 5 minutes before the FOMC Minutes were released. We found the Fed basically offered nothing new and it still is data dependent. Curve didn't really steepen, so not sure if the front end has quite thrown in the towel on shorts. Watch out for huge month-end index duration extension (.21 yrs, fairly large) front-running starting tomorrow and most of Thursday.
YOu wouldn't happen to remem the avg duration for the lehman index would ya? Are they doing it due to the reintro of Long Bond or just rebalancing?
mcurto and lance,
Speaking as someone who made a ton of money selling short on the way down from 110 today, decided to exit all but one contract at virtually the bottom (my target for today was 109 19) and then went to bed, what would you do with the short last remaining short?
Yeah, I know, I know. I should've known better. Day trading I'm making a killing. Holding overnight because I think the down move has further potential has bitten me each time. The only saving grace is that it is a fraction of my normal size. Giving up 20 ticks of profit bites though. In any event, at least the day went exceedingly well and profitable just 20 ticks less than it could have. All because I went to bed with thoughts of a market top in place and the sweet low of 108 coming soon.
Speaking as someone who made a ton of money selling short on the way down from 110 today, decided to exit all but one contract at virtually the bottom (my target for today was 109 19) and then went to bed, what would you do with the short last remaining short?
Yeah, I know, I know. I should've known better. Day trading I'm making a killing. Holding overnight because I think the down move has further potential has bitten me each time. The only saving grace is that it is a fraction of my normal size. Giving up 20 ticks of profit bites though. In any event, at least the day went exceedingly well and profitable just 20 ticks less than it could have. All because I went to bed with thoughts of a market top in place and the sweet low of 108 coming soon.
Remember the Treasury refunding was this month and the bulk of the supply was the 10yr and 30yr, so that tends to lengthen the average duration extension a bit more than usual. This is also why the 30yr bond remains very solidly bid (notice it begrudgingly gave up its bid this morning and stormed higher this afternoon). The Nomura index in Japan is also going to see a higher extension than usual so would keep an eye on how JGB's fare in tomorrow nights session especially on their close sometime after midnight our time. I can't remember the exact number for the previous US extensions but less than .1 and even around .05 years or so rings a bell. Shorts have quite a bit to contend with from the ADP number to index extension to NFP on Friday. I think after that we could trade lower again, but like the Fed are data dependent, although just barely less than forecast data won't cause a huge rally at this point, too many longs out there already.
L
Lance Carson
The market has entered my long standing target range of 110-111 for the rally from the May low. I see resistance at 110-08 and I think the next significant move in the bonds will be downward to a low above the May low. Right now I am guessing that this upcoming low will develop around the 106-24 level.
Sharp,
The allocation for each contract is the initial margin or the day-trading margin.DO NOT trade more than one contract until you can acomplish a minimun of six consecutive winning trades without getting stop out.I trade a minimun of 200 contracts.
Sharp,
The allocation for each contract is the initial margin or the day-trading margin.DO NOT trade more than one contract until you can acomplish a minimun of six consecutive winning trades without getting stop out.I trade a minimun of 200 contracts.
Sharp,
You've come to the right place. Between Lance, mcurto, and the original poster of this thread you can't go wrong. Read this thread in its entirety.
I typically trade 1 - 10 contracts almost everyday. It all depends on the risk I determine the trade represents. Personally, I agree 100% with Lance. If you want a hard fast rule, trade 1 ZB contract per 10,000 USD. If you want to push it, trade 2, but never more than 2 per 10,000 USD. Especially at your stage.
Later, with the experience, if you are day trading exclusively, you may be able to push it further but then you are entering very dangerous territory. You can make excellent money trading 1 - 2 contracts consistently every day. See my journal for some insight on this. I think I wrote about excessive trading back in December of last year.
Granted you won't make Lance type money, but then again, you and I won't win the Tour de France, but we can win our local and regional competitions.
You've come to the right place. Between Lance, mcurto, and the original poster of this thread you can't go wrong. Read this thread in its entirety.
I typically trade 1 - 10 contracts almost everyday. It all depends on the risk I determine the trade represents. Personally, I agree 100% with Lance. If you want a hard fast rule, trade 1 ZB contract per 10,000 USD. If you want to push it, trade 2, but never more than 2 per 10,000 USD. Especially at your stage.
Later, with the experience, if you are day trading exclusively, you may be able to push it further but then you are entering very dangerous territory. You can make excellent money trading 1 - 2 contracts consistently every day. See my journal for some insight on this. I think I wrote about excessive trading back in December of last year.
Granted you won't make Lance type money, but then again, you and I won't win the Tour de France, but we can win our local and regional competitions.