February 11th, 2009

See DeCarley Trading's "Trade Like a Girl" article in the March issue of Stocks Futures and Options Magazine!

Bonds and note climb despite $21 billion 10-year Treasury auction.

The Treasury complex enjoyed another round of buying as short traders look to cover their positions.  Uncertainty over the future of the floundering banks, tumbling equities and fading confidence in Treasury Secretary Timothy Geithner's rescue plan kept fresh selling on the sidelines. 

Also helping keep Treasuries bid, were reminders of the Fed's option to purchase long-term Treasuries as a means of influencing interest rates.  Chicago Federal Reserve President Charles Evans commented on the Feds remaining bullets and claims that he would prefer to see how other programs play out before making the decision to purchase its own debt instruments. 

We have made a lot of progress in the last few days but the charts are telling me that there are rough waters ahead.  I expect that the 30-year T-Bond futures could see prices near 130 in the next session or two but am doubting its ability to progress above such levels.  The 10-year note has significant resistance near 124 and may have a hard time closing above this level.  Five-year note futures will likely run out of steam near 119, if they haven't already.

Our technical projections above are complicated by events in Washington and the equity market reactions to news.  We believe that equities will continue to struggle in the immediate term but expect some type of temporary low to be made  late Thursday or even Friday.  This assumption is based on the premise that the indices tend to make a low at the end of the week preceding option expiration.  With that said, if equities make a probing low at sometime tomorrow or Friday before reversing higher, Treasuries may overshoot our targets. 

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.  However, market analysis and commentary does.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

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Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

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Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

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*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.