March 2nd, 2009

Option traders, if "Commodity Options" can save you one tick...you will recoup most of your investment.  Get it now through Amazon.com or Borders.com!

Treasuries rally as equities melt

Bond and note traders were finally able to put supply concerns behind them and look to other fundamentals for guidance.  Today's driving force behind Treasury prices was a flight to quality bid on the heels of a global equity market plunge. 

A slightly better than anticipated ISM number didn't seem to deter bond buying and was likely offset by equally as weak news in construction spending.  Both personal spending and income figures were reported to be better than expected. 

The most influential news of the day wasn't necessarily Treasury related.  News of AIG's staggering $61.7 billion quarterly loss renewed banking fears and pushed the Dow below 7,000 for the first time since '97.  Suddenly, Treasury traders are ignoring the implication of such news that could suggest more Fed Treasury issues.  We have been expecting this day to come. 

You should be trading the June contract by now!  We see the first area of resistance in the June 30-year bond near 125'29 and again at 128'10 in the 10-year note near 124'16.

Depending on action in equities, we may be looking to sell the June 5-year note just under 123. 

Late last week we were interested in selling puts, but missed the trade.  However, if the rally continues we could get an opportunity to sell calls.  If you are interested in option trading, option selling or option spread trading pick up a copy of my book "Commodity Options".  It is currently being discounted at Amazon for a limited time.  The book covers several option strategies in detail in financial futures and commodities...and if it saves you 1 tick in the markets you have recouped your investment.

Sorry so short, we are a little behind.  Feel free to contact us if there is anything that we can do for you.

* 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.

Flat

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

February 26 - Our clients were recommended to buy the March 5-year note near 117'10.

·         We recommended to sell this position on this morning's rally near 117'24 to lock in a profit of about $450 minus commissions and fees.  We may look to put this trade back on next week. 

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

*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.