T Notes for Shorts and Longs
4
SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573 E-MAIL [email protected] WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees, other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest, relationship or arrangement in relation to them. in association with Market Bulletin 25 th March 2010 TNotes under pressure – with still more bear potential The Technical Trader’s view: 23 30 7 December 14 21 28 4 2010 11 19 25 1 8 February 16 22 1 March 8 15 22 29 5 April 1000000 2000000 3000000 113^04 113^08 113^12 113^16 113^20 113^24 113^28 114^00 114^04 114^08 114^12 114^16 114^20 114^24 114^28 115^00 115^04 115^08 115^12 115^16 115^20 115^24 115^28 116^00 116^04 116^08 116^12 116^16 116^20 116^24 116^28 117^00 117^04 117^08 117^12 117^16 117^20 117^24 117^28 118^00 118^04 118^08 118^12 118^16 118^20 118^24 118^28 119^00 119^04 119^08 119^12 119^16 119^20 ^32 118-23.5 High 113-18 Low 117-16 High 115-14.5 116-8.5 Low Note US Treasury 10 Year COMP Jun 10 DAILY CHART The TNote has had a torrid time this week. The triple failure at the 117-16 level is clear, so too is the failure of the rising diagonal from the beginning of 2010. Add to that the breakdown through the Prior Low at 116- 8.5 completing a small Double Top and the bears look to have the bit between their teeth. A push beneath 115-14.5 would add to the bear impetus of course.
Transcript of T Notes for Shorts and Longs
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SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL [email protected] WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.
in association with
Market Bulletin 25th
March 2010
TNotes under pressure – with still morebear potential
The Technical Trader’s view:
23 30 7
December
14 21 28 4
2010
11 19 25 1 8
February
16 22 1
March
8 15 22 29 5
April
1000000
2000000
3000000
113^04113^08113^12113^16
113^20113^24113^28114^00114^04114^08114^12
114^16114^20114^24114^28115^00115^04115^08115^12115^16115^20115^24115^28116^00116^04116^08116^12116^16116^20116^24116^28117^00117^04117^08117^12117^16117^20117^24117^28118^00118^04118^08118^12118^16118^20118^24118^28119^00119^04119^08119^12119^16119^20
^32
118-23.5 High
113-18 Low
117-16 High
115-14.5
116-8.5 Low
Note US Treasury 10 Year COMP Jun 10
DAILY CHART
The TNote has had a torrid
time this week.
The triple failure at the 117-16
level is clear, so too is the
failure of the rising diagonal
from the beginning of 2010.
Add to that the breakdown
through the Prior Low at 116-
8.5 completing a small Double
Top and the bears look to
have the bit between their
teeth.
A push beneath 115-14.5
would add to the bear impetus
of course.
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SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL [email protected] WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.
in association with
J J A S O N D 2008 M A M J J A S O N D 2009 M A M J J A S O N D 2010 M A M J
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
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124
125
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127
128
129
130
131
^32
109-20.5 December
2006 High support
128-22.5
Note US Treasury 10 Year COMPContinuous
WEEKLY CONTINUATION
CHART
There is no completed pattern
here (except, maybe, the bear
rising wedge in November
2009)
But there is a clear possibility of
a Head and Shoulders Top
should the market break down
through the diagonal at 114-23
and rising.
There is an intermediate point
of reference (that is being
tested right now) at the
diagonal (115-24) drawn
through the two lows from the
low of June 2009.
That has not yet broken either.
But should the market break ondown through the 114.64 level
a large Top will have completed
and will send it on down a lot
further still.
The Macro Trader’s view:
We have been frustrated bears of the US 10 Year Note for quite some time, and have watched
as it has found support from repeated waves of risk aversion driven by the Dubai debt scandal
and the Greek debt crisis to name just two of the recent high-profile events that have caused
traders/investors to sell stocks and buy government bonds for safety.
But all the time the National debt of several major economies has continued to grow, especially
in the US. The US president has said the deficit needs to be reduced, but his actions don’t
match those infrequently spoken words.
Potential Head andShoulders Top on a
breakdown through 114-23
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SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL [email protected] WWW.SEVENDAYSAHEAD.COM This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sourcesbelieved to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein wereconsidered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,relationship or arrangement in relation to them.
in association with
Indeed, only this week Congress has passed the expensive heathcare reforms many argue will
add to the budget deficit.
But why now should the US 10 year Note sell off when it has defied gravity for so long? There
are several reasons:
• The US economy has over recent months shown unambiguous strength with Fed officials and
several commentators expressing the opinion that the US Labour market is about to turn and
start registering Job creation,
• The Greek debt drama remains unresolved, and although the US S&P has refocused, others
haven’t. A Chinese Central Banker said today that Greece isn’t the only problem as there are
other major economies carrying unsustainably high government deficits,
• Fed Chairman Bernanke said today when testifying in Congress that the US Government needs
to come up with a credible debt reduction program.
Are these factors enough to send US bonds lower, or will the backdrop of benign inflation
seduce traders into remaining buyers of US IOU’s?
Bond markets trade on several key fundamentals:
- Inflation expectations,
- Short term interest rate expectations,
- National debt ratios and the ability of the government to fund it,
- Current budget deficit levels, and
- Government policy towards the fiscal stance going forward.
The last three factors are already bond market negative. The other two factors soon will be if
the US President doesn’t wake up and realise that he cannot keep writing IOU’s at the current
pace indefinitely.
Already this week a US debt issue struggled, that could be a signal for what is to come. We
judge that as economic growth becomes more entrenched, traders will become increasingly
critical of this government’s fiscal policies.
When they judge the stimulus has been in place for too long and is likely to feed inflation, US
Bonds will surely sell off hard. We believe that day is not long off.
Mark Sturdy
John Lewis
Seven Days Ahead
