The Bond Report by Carley Garner
The Bond Bulletin
by Carley Garner
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2008-07-01
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July 1st, 2008
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Despite yesterday’s weak close, Treasuries spent a majority of the day well into positive territory. The mid-day stock meltdown seemed to be bond supportive but there was an obvious lack of upside momentum and that became more and more obvious as the day progressed. I don’t think that the slow bid signals an upcoming trend reversal (end of the up-move) but I do think that it points toward overbought conditions and a potential correction.
In previous newsletters I have pointed out 116’24 as a major area of resistance. Today’s intraday high was 116’16, not far off the mark, and depending on whether or not stocks behave themselves may have been the near term top. I am looking for the September bond futures to correct lower to 113’23. After all, we have witnessed a rally from under 112 to the mid-116 area in less than three weeks. The note found a high of 114’19 today (yesterday’s report called for a rally to 114’20) and should correct lower to 112’25.
The only news to speak of was the ISM manufacturing index which ended a losing streak by posting a number above 50 (suggesting growth). The news was bond bearish and did result in temporarily weaker prices. However, it was equity market weakness that prevented the Treasury complex from making any progress on the downside. That of course changed later in the day as stocks posted a miraculous recovery.
Only time will tell whether my technical analysis will turn out to be correct but I am giving myself plenty of room for error (see recommendation to sell Bond call below). I have been called cowardly, wimpy, etc. but the bottom line is that we are all here to make money not to satisfy our yearning for gambling. There is no such thing as a guarantee but if you give yourself room for error and put the odds in your favor you have a much better chance of leaving this game a winner….and that is my game plan.
Option Recommendations
**There is unlimited risk in naked option selling.
June 27 – Sell the August 119 calls for 15 ticks or better…be careful with this!!
· June 30th – Place a GTC order to buy this back for 5 ticks or better
Futures Recommendations
**There is unlimited risk in trading futures.
Flat
Carley Garner
Alaron Research Team
800.935.6492
info@carleygarner.com
www.CarleyGarner.com
There is substantial risk of
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| Meet the Author |
Carley Garner
Senior Analyst and Broker; Stocks and Commodities Magazine columnist; Author of “Commodity Options” to be published in early-2009 by FT Press a division of Prentice Hall.
The Bond Bulletin has contributed 103 issues.
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