Bond Trader 2006

Status
Not open for further replies.
0947 I took on a small short position in the ZN's looking for a test of the 106 255 low.

Short at 106 265. Quick trade.

UPDATE
0951 The 30 year kissed its low of the day, let's see if the 10 year follows through.

By the way, we could easily jump right back up to 106 280. This is the nature of a day like today.

Also, the ideal entry was 106 275. Wasn't watching at the time.
 
John,

This market has been held up( bid) mostly by Hedge Funds, what they look at is the stability of the dollar.

Trade lost its momentum even as commodity prices were dropping all around, taking inflation expectations off with them (bond good) but, on the flip side, adding to the potential for the economy to continue to be driven by consumer spending (bond bad).

On the Technical side, the Daily Indicator has turn negative
( 80% reliable) Downcrossed on 9/5.
 
Quote from Lance Carson:

John,

This market has been held up( bid) mostly by Hedge Funds, what they look at is the stability of the dollar.

Trade lost its momentum even as commodity prices were dropping all around, taking inflation expectations off with them (bond good) but, on the flip side, adding to the potential for the economy to continue to be driven by consumer spending (bond bad).

On the Technical side, the Daily Indicator has turn negative
( 80% reliable) Downcrossed on 9/5.
More...


NEW YORK (MarketWatch) - A Treasury Department auction of $8 billion in new 10-year notes Tuesday afternoon meet with solid demand, including a high bid-to-cover - or bids accepted to bids received - ratio of 2.91. The auction was a reopening of an August 10-year note sale, meaning that the notes actually have a maturity of 9 months and 11 months. The indirect bid, a category that is scrutinized because it includes foreign central banks, was 18.8%, a percentage that is fairly high for a reopening. The auction produced a high yield of 4.810% and a median yield of 4.797%.
 
I put a little thought into this - would a stronger dollar decrease price demand at treasury auctions, since lower buying power decreases net yield on the notes? (I guess it depends who the majority of foreign note buyers are)

On the other hand, the sharp drop in oil that occured seemed like a bullish signal to bond markets, since fed tightening becomes less likely.

Today's usd-eur motion was erratic, and by the time the auction occured we were in 1.268.. territory. Again, counterintuitive to me - it seems that record trade deficits would have a dollar weakening effect. Initially there was a buying surge that was immediately cutoff - the euro sold net a max of .50 (from 1.2725 to 1.2675 territory) throughout the day.

Is all of this good explanation for the rangebound and seemingly counterintuitive motion thats been occuring the last week or so?

PS - I'd feel like being more bullish until the fed announcement comes. What explains your bearish inclination? Looking at the charts (at least on ZN), I don't see any serious support being broken to see a break in the bullish trend. The only thing I do see is upward resistance (107 160/80/50).

Thats the reason I ask what pricing potential on these bonds is factoring in currency #s, oil prices, and intl central bank policies.
 
Quote from Lance Carson:

Did you placed a buy stop at 110-08 for a 17 tics profit
(no brainer)
More...

Lance,

Yep, pretty much a no-brainer as you say. I put stops in on my profitable ZB trade and on the small position I took in the ZN's.

The large profit on the ZB's, the daytrade profit on the first ZN trade more than made up for the small loss on the second ZN trade of the day.

Pretty amazing action. I wish I could have stayed up for 1205 CST break of the rectangular price pattern. Hindsight is 20/20, but I do believe knowing what I now know about "V" days, I would have gone long there.

Please visit as you are able and let us know what's on your mind.

John
 
Quote from scriabinop23:

I put a little thought into this - would a stronger dollar decrease price demand at treasury auctions, since lower buying power decreases net yield on the notes? (I guess it depends who the majority of foreign note buyers are)

...SNIP...

Is all of this good explanation for the rangebound and seemingly counterintuitive motion thats been occuring the last week or so?

PS - I'd feel like being more bullish until the fed announcement comes. What explains your bearish inclination? Looking at the charts (at least on ZN), I don't see any serious support being broken to see a break in the bullish trend. The only thing I do see is upward resistance (107 160/80/50).

Thats the reason I ask what pricing potential on these bonds is factoring in currency #s, oil prices, and intl central bank policies.
More...

scriabinop23,

Your analysis is sound. I don't have a very good track record for long term analysis. As I'm a daytrader it doesn't matter. Per my previous post, I went short the ZB's on Friday of last week at 110 23. I decided to hold for a longer time due to some price support studies I had done. Per Lance's question / statement, it doesn't really matter for me. I can be biased to the short side as a daytrader, take an excellent trade, hold for 1 or 2 days, and even though wrong, make an excellent profit on the trade thanks to a stop placed at a reasonable point.

My bias adjusts according to what the market tells me.

In conclusion, my long term bias from Friday was short. As of 1205 CST, I have to admit that I'm wrong, at least for now.

All in all, I'm quite pleased with my trading results for Friday through today. This is unusual for me to make that many ticks on a trade, and trading around the ZB's with the ZN's also had excellent results.

John
 
scriabinop23,

I gave some more thought to your post and realized something. In the event that you've come to the journal late, if you go back to the beginning, you'll see that typically I'm engaged in very quick 4 - 6 tick intra-day moves in the 30 year, i.e. ZB. For the most part I am very consistent with these types of trades. Three times since January of this year I have held for overnight and longer. Of the three, only this one ended well for me.

The hold over night posts may have given the impression that I'm doing both or changing my strategy. Holding for days is simply something I'd like to get into, but other than Friday's trade I haven't had much success with.

In conclusion, in the event that it seems that I'm not elaborating sufficiently on my views of the fundamentals, it is because honestly, for my area of expertise, 4 - 6 tick intra-day moves, it really doesn't matter.
 
0739 CST Long 2 ZB 110 29.

Profit target: 111 12

Watch carefully: 111 00 for reasons posted earlier in this journal.

Do not tolerate a return to yesterday's high or lower.

I'll be posting some interesting observations on yesterday's activity. Stay tuned.
 
Status
Not open for further replies.
Back
Top