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

bthomas · Sep 23, 2009

F2 Comments: The market did play to our script on Tuesday. We wanted to sell early strength to see if 116-20 could be taken out. If not, we wanted to get long. 116-20 did hold and the market began to trade higher from there. The buyers left the market at 117-05/065 and the market closed strong at 117-02.

Want to buy early weakness and see if 117-08/12 can be taken out. If not, will trade from the short side of the market.

Wednesdayâs news: DOE crude inventories; 5 Y auction and FOMC announcement. Expect the marketâs focus will be the 5Y auction followed by the FOMC announcement.

1st buy zone is 116-29/117-01 followed by 116-26 OB. Exit and/ore reverse, if 117-08/12 is then rejected.

bthomas · Sep 23, 2009

F2 Comments: It was a typical day during an auction week. Both sides of the markets were tested twice as the news and Dealers worked the pending auction to encourage buying. Japan has been on holiday and did cut the demand for todayâs 5Y demand. The auctionâs coverage was not as high as the market would have liked and the Note sold and was trading between 116-20 and 116-305 when the FOMC spoke.

The FOMCâs announcement good for both markets, but was deemed a bit more supportive for the Note than for the Indexes. The Indexes reversed after pulling stops at 1075 and the Note rallied to close strong.

Some news to get through Thursday and the 7Y auction. If the past is predictive of the future, then the 7Y should take the market higher tomorrow post auction. Can trade from either side tomorrow. Can sell failure at 117-16/20 and plan to cover around 117-00. And can be a buyer in the 116-28/117-00 when the selling dries up.

HighNetWorth · Oct 4, 2009

Limit SELL 122-21

bthomas · Oct 13, 2009

F2 Comments: The market found buyers in the OVN session and that buying continued into day session on Tuesday. This buying may have been tied to early weakness in the ES or it could have been more Dealer buying as has been the case of late. The buying took the market to 119-01 before its close at 118-229.

The market is pointed higher Wednesday with some help from the ES. Tomorrowâs news: Export Prices/Import Prices; Retail Sales is expected at -2.0; ex-Autos at -.2%; Business Inventories at -.8%; and last monthâs FOMC minutes.

If ES is sideways to lower, want to buy the ZN and see if 119-04/095 can be taken out. If not, will exit and look to the short side of the market. First buy zone is 118-21/25 followed by 118-17 OB. Exit and/or reverse, if 119-04/095 is then rejected.

bthomas · Oct 15, 2009

F2 Comments: The analysis favored lower prices at the close of trading on Wednesday. The early news was also negative. The Note quickly hit 117-24, the trading target for this entire week. The Philly Fed news was supportive and the Note rallied back into our recommended sell zone at 118-07/11, which held. The Note drifted lower for the rest of the session and did close weak.

The market analysis favors lower prices Friday. Some news to get through: Net LT TIC flow; Capacity Utilization at 69.7%; Industrial Production at +.1%; Michigan Sentiment at 73.5.

Want to sell early strength and see if 117-20/24 can be taken out. Aggressive sell zone is 117-27 OB. Preferred sell zone is 117-31/118-03. Cover, if 117-20/24 then holds.

bthomas · Oct 19, 2009

F2 Comments: The market traded sideways Monday with both support and resistance retested several times during the session. The market did close strong in spite of a strong ES. The market is pointed higher Tuesday without news.

Tomorrowâs news: Housing Permits is expected at 590K; Starts at 607K; PPI at +.1%; Core PPI at +.1%; DOE crude inventories.

Can trade either way tomorrow. Perhaps the easiest long is to buy a breakout from 118-105. The easiest short would be to sell failure to take out 118-105. First trade will be to buy early weakness and see if 118-105/16 can be taken out. If not, will exit and look for a place to get short.

bthomas · Oct 22, 2009

F2 Comments: Resistance held in the OVN session and the market opened soft and sold Wednesday. The only bounce the market saw was when the ES sold heavily into its close. The close was weak. The analysis favors lower prices Thursday with some help from the news and the direction of the ES.

Some news Thursday: Jobless Claims is expected at -520K; FHFA Housing Price Index ??? (+.3% last month). This news usually doesnât move the markets.

Want to sell into early strength and see if 117-20/2 can be taken out. If not, will close this trade and look to the long side of he market. First sell zone is 118-05/09. Back up sell is 118-11/15. Cover, it 117-20/28 then holds.

bthomas · Oct 25, 2009

F2 Comments: The market traded lower Friday as per the analysis and did close weak. It is pointed lower on Monday too. No news to drive the trading.

This weekâs biggest dynamic is the 20 & 7Y auctions. Dealers have traded into the auction two different ways: their favorite way has been to sell the market down into the auctions and then rally it back; or of late, to run the market up into the auction and force the market to pay higher prices as the paper moves from the Treasury into institutional hands. We should get our answer by Tuesday morning on how the Dealers will play next weekâs auctions.

Want to sell into early strength and see if 117-00/02 can be taken out. If not, will cover. Aggressive sell zone is 117-15 OB. Back up sell is 117-19/23

bthomas · Oct 28, 2009

F2 Comments: It is auction week and it definitely adds confusion and complexity to the trading. Mondayâs market activity favored a retest of support and or lower prices. Support was retested in the OVN session and held. Support moved higher in the day session with 117-04 the best the sellers could do before losing their sellerâs zeal.

The Consumer Confidence number was supportive. The 2Y auction was much better than anticipated. The Note continued to rally and did close strong.

Some news to navigate Wednesday: Durable Orders is expected at +.7%; ex-transportation at +.8%; New Home Sales at 440K; DOE crude inventories.

Todayâs 5Y auction makes a call tougher than normal. If the OVN market is higher and then reverses, the easiest sale will develop. If the OVN market is lower, the easiest long will develop. Based on the structure at the dayâs close, want to buy early weakness and see if 118-06/10 can be taken out. If not, will start to work the short side of the market. Buy zone is 11721/25 followed by 117-13/17. Exit and/or reverse, if 118-00/06 is then rejected.

bthomas · Oct 29, 2009

F2 Comments: The market traded higher on Wednesday as per the structure and analysis, and closed strong. The profile favors higher prices tomorrow with some help from the news and the direction of the ES, which closed on new lows.

Thursdayâs news: 3rd Q Adv. GDP is expected at +3.2%; Deflator at +1.3%; Jobless Claims at -520K; Continuous Claims at 5.97 M.

Want to buy into early weakness and see if 118-16/24 can be taken out. If not, will look to the short side of the market. First buy zone is 118-01/05. Back up buy is 117-25/29. Exit and/or reverse, if 118-16/24 is rejected.