F2 Comments: The market sold off of negative early news and an ES that held Thursdayâs gains. The selling was sustained and the market closed weak too. The analysis without new news favors lower prices on Monday. Only news on tap is LEI, expected at +.5%. If this number comes in higher than forecast, it should pressure the Bond further. If the ES is sideways to higher, want to sell early strength and see if 115-20/28 can be taken out. First sell zone is 116-15/19 followed by 116-23/27. Cover, if 115-20/28 holds as support.
F2 Comments: The market rallied off its day session opening and while it did pause at 116-09, the structure favored higher prices as the day progressed. It was a P pattern and that favors higher prices for whatever the reason. The market broke out in H period hitting 117-11 before the buying stopped. The rest of the day was spent in consolidation. The day sessionâs close was strong. The market activity analysis favors higher prices again tomorrow w/out news. No news to drive tomorrowâs trading. Down to the direction of the ES, IMO. If the ES is sideways to lower, want to buy early weakness and see if 117-12/20 can be taken out. If not, will exit the trade and start to look to the short side of the market. First buy zone is 116-21/25. Back up buy is 116-13/17. Exit, and or reverse, if 117-12/20 is rejected.
Bernanke's Comments Rally Financials F2 Comments: The market started to sell based on ES strength. When the ES stopped its rally, the financials started to make a comeback. Then Bernankeâs comments hit the tapes and the financials broke out to the upside. His statement was positive for the Note and Bond and the market reacted accordingly. The Fed will remain accommodative, inflation wonât be a problem at least until 2011 and the economy may be bottoming. Buy Notes! No news to negotiate Wednesday. The focus will be the ESâs reaction to earningâs reports. If the ES is sideways to lower, want to buy early weakness. If ES has rallied, will look to the short side of the market. First buy zone is 117-17/21, then 117-13 OB. If 117-28/118-01 is then rejected, will look to the short side of the market.
F2 Comments: The market did sell as per the analysis and that selling was present into the close. The news, market structure, ES strength and auction announcements all added to the selling. The selling took the market to support. This support must be taken out to hold the recent shorts in their positions or EOW profit taking is likely. Little in the way of news Friday: Michigan Sentiment, Rev. is expected at 64.9. If ES is sideways to higher, want to sell early strength and see if 115-16/20 can be taken out. If not, will cover. If ES is selling, will consider a long.
Options Expiration Holds the Market in Check on Friday F2 Comments: Option expiration held the market in check Friday. Option expiration favored a close from 116 to 117 and this is what happened. It will be ready to move again on Monday. Some news to affect the trading Monday: New Home Sales is expected at 355K. If ES is sideways to higher, want to sell early strength and see if 115-16 can be taken out. If not, will cover. If ES is moving lower with some momentum and near support is tested and holds, will consider a long.
F2 Comments: The 2 Y auction did bring in buyers on Tuesday as it usually does. It almost always is a strong auction as todayâs was. That didnât stop the market form selling post auction though. The Dealers do manipulate the market at auction time to encourage buying. The 5 and 7 Y auctions can go either way. Will assume that the Dealers will try to push prices lower tomorrow first to tease the buyers into buying weakness early in the session. Some news to influence the trading too. Durable Orders is expected at -.5%; ex-transportation at +.1%; and crude inventories. Want to sell into early strength and see if 115-20/24 can be taken out. If not, will cover.
Financials Fall on Poor 5 Year Auction F2 Comments: The market was on hold until the 5Y auction results hit the market. The results were negative and the Note broke hitting 115-155 before recovering to its close at 116-00+/-. Some news Thursday: Jobless Claims is expected at -585K. If it comes in below 550K, the financials should be pressured. If above 600K, then the financials should catch some buying. The focus should quickly move to the 7Y note. The intermediate term issue is usually the one the Dealers use to set up the long term issue. The 5Y did bring in some quick selling, but failed to break the market. If support holds early in the session, the Note is poised to rally at least into the 7Y auction. Can trade form either side tomorrow. Can sell failure at 116-04/12 or buy w/signs of buyers with us, if 115-20/24 then holds.
Opening Comments for 7/30 Charles Cochran: (06:04)_The Note should open close to support. The OVN session didnât get as high as we had hoped. Unable to execute in our preferred sell zone at 116-03OB. Market was capped at 116-00. So far 115-20 is holding as support. Still like the short side of the market. Would like to sell into early strength. 115-27/31 is the sell zone. Market must take out 115-16/20 to stick with the trade. If not, I think that buyers will come back into the market in anticipation of a rally into the 7Y auction.
F2 Comments: It was a typical auction trading set up and conclusion on Thursday. The Dealers usually run prices lower into an auction and then reverse the market post auction to make the cash buyers chase the market higher. They did run the market lower and then rallied it post auction. The market is set to trade higher Friday as well. There is a lot of news to get through in the morning and it could influence the trading. GDP-Adv. Is expected at -1.5%; Chain Deflator at 1.0%; Core PCE at 2.4%; Employment cost Index at .3%; and Chicago PMI at 42.0. If ES is sideways to higher, want to buy into early weakness and see if 116-16/23 can be taken out. Buy zone is 115-29/116-05. Exit, if 116-16/23 is then rejected.
FOMC and Treasury Auctions This Week Charles Cochran has returned from vacation. Here are his closing comments for Monday 8/10. F2 Comments: The market found buyers inside of Fridayâs lows. Support held and the shorts began to cover. This is another FOMC week plus Treasury auctions. Will be interesting to see how things shake out by Friday. Supply suggests the market will be lower. Dealer manipulation suggests the market will rally into Thursdayâs auction, when a reversal could be in store for the market. By todayâs close the market activity analysis favored higher prices tomorrow. Some news to influence the trading early in the session. Then the focus should shift to the 3Y auction. This auction is usually a good one. If the ES is sideways to lower, want to buy early weakness and see if 115-28/116-00 can be taken out. If not, will begin to look to the short side of the market. Buy zone is 115-09/17.