The 3-2-1 Approach: A Simplified Method for Trading Any Market

Market Favors Lower Prices on Wednesday

F2 Comments: The market paused from its recent heavy selling, but did build more volume in the lower half of the distribution than the top. This favors lower prices Wednesday.

Some news to impact the Wednesday's trading: ADP Private Employment # is expected at -543K; Factory Orders at +.3%; ISM Services at 45.0; DOE crude inventories.

If ES is sideways to higher, want to sell early strength and see if 115-07 can be taken out. If not, will cover and begin to look to the long side of the market. Sell band is 115-27/31 or 116-03/07. Cover, if 115-07/12 then holds. OK to buy, if 115-07/12 holds as support. Try to get buys done at 115-17 OB.

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Strong Close on Wednesday

F2 Comments: The market held Tuesday’s gains and did manage a strong close. The market is pointed higher with some help from the early news and continued selling in the ES.

Friday’s news on Unemployment should hold the market in a range Thursday. Can see a move a bit higher Thursday with stops pulled above 116-16. If the market can’t take out 116-20/28, I think that the buying will dry up and new selling will enter the market and drive prices back to 115-12/16.

Thursday’s news: Jobless Claims is expected at -525K; Rev. Productivity at 1.2%; Unit Labor Costs at 2.9%.

Best long would set up off an OVN session that trades lower. If this is the case, want to buy into this weakness, especially below 116-00. If 116-16/20 is then rejected, I will exit this trade. If the market opens higher and can’t take out 116-20, can get short, with a cover, if 116-00+/- then holds.

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Selling Resumes in the Financials

F2 Comments: The market found sellers in the OVN session. When the day session opened, the selling increased and was present into the day session close. The contract closed pointed lower Friday.

The NFP is expected to show a loss of 550,000 jobs and Unemployment at 9.2%. If these numbers come in lower than forecast, the financials can sell even lower. Know the news and you have the trade. Next week’s auctions should continue to pressure the Bond and Note.

Prime sell zone is 114-19/27. 114-00 will have to be taken out quickly to hold tomorrow’s shorts in their positions.

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Financials Still Under Pressure

F2 Comments: Another day of trading. Another day lower. The financials are getting whacked and should remain under pressure until the government cuts deeply into its current borrowing program. The credit rating of the nation came into question two weeks ago and the market has been heavily sold ever since. 110, 100 then 85 are the major support points. Very little the Fed can do about it either.

No news to drive Monday’s trading. The direction of the ES may be the only thing that slows the selling in the financials. Want to sell early strength and see if 113-00 can be taken out. If 113-00 holds, will cover. First sell band is 113-19/23. Back up sell is 113-27/31. Cover, if 113-00/08 then holds.

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Pre Market Comments for Tuesday 6/9

(06:32)_Pretty quiet OVN. Market did trade into the back up sell range of 113-19/23 w/an OVN high of 113-235. ES failed to extend its late rally and sold. Financials found buyers OVN.

Today’s focus should be the direction of the ES and the 3Y auction. Dealers remain short into the auction with their futures positions and have built a large call position over the last 3 days. Can manipulate the market via options too. Market makers have to buy futures to cover the calls sold. Will see how this plays out.

3Y auctions usually go well. The lows of late generally have come on the intermediate maturities followed by rallies into the longer term auction to help move the paper. If the ES sells again today, the ZN should find light buying. If not, they can trade lower. Can sell failure at 113-22/26 or against the buck. Or buy the 113-04/08 level once for a quick bounce.
 
I was looking at a zn 10 US Treasury Note chart and the volume is hardly anything that it makes me wonder if I am looking at the same istrument you are.
 
September is the lead month in the ZN - ZN U9. The daily volume is around 850,000. The ZB, the Bond, is around 200,000.

I would say the Note has excellent volume.
 
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