Classic ‘buy the rumor, sell the news’ … day in bonds
| size=3 helvetica>CURRENT POSITIONS (AS OF 01/07/00) | |||||
|---|---|---|---|---|---|
| size=2>Market | Helvetica>Date | face=Arial, size=2 Helvetica>Long/Short | face=Arial, size=2 Helvetica>Enter | face=Arial, size=2 Helvetica>Stop | Helvetica>Target |
Mar. 99 | helvetica>Flat | ||||
Mar. 99 | Â | helvetica>Flat | Â | Â | Â |
Mar. 99 | Â | helvetica>Short | Â | Â | Â |
Bonds
| “This was a classic ‘buy the rumor, sell the news’ type of day in the bonds.” |
The March bond contract ( href=”https://fast.quote.com/fq/tradehard/quote?symbols=USH0″>USH0)
sold off this morning on the jobs
report which showed non-farm payrolls increased to 315,000 in December. This
was higher than expected, and bonds immediately tried to make new lows on the
bearish news. However, when bonds failed to do so, we saw short covering
start, as the bears are anticipating this bad news already priced in. This was
a classic “buy the rumor, sell the news†type of day in the
bonds.
Technically, with bonds unable to make new lows past the 89-20
area and then closing at the upper of its range, today makes a bounce from
here very likely. Also, with many trend-following funds still short, I am
further bullish at this point. All we need is a good entry point which we
could get next week on the PPI and CPI reports.
size=2>Currencies March euro futures ( href=”https://fast.quote.com/fq/tradehard/quote?symbols=ECH0″>ECH0) were
down today as the stock market in the US bounced back and money flowed back
into the US dollar. However, I see this as a pullback into the bottom that was
formed and will most likely establish a long position on
Monday.Â
Technically, there has been a lot of short covering at
these levels but I think the shorts have it right this time. The longer-term
trend traders will have to start buying if the market trades above the 104.60
area. This is important, since there are so many trend traders in this
market.
size=2>Stocks March S&Ps ( href=”https://fast.quote.com/fq/tradehard/quote?symbols=SPH0″>SPH0) had a
relief rally when bonds failed to make new lows. The volatility has been quite
high lately. I have been on the sidelines waiting for it to come down some, to
keep our stops closer. The market also got a lift today from a higher Nasdaq
which had seen more downside pressure than the NYSE stocks. This was also a
sign that confidence was coming back to the market today.Â
Technically, the most interesting
thing I see today is the retracement-level strategy. A 50% retracement of the
recent downmove would put resistance at the 1450 area. It is interesting to
note this because when this strategy works, it does with amazing accuracy. The
VIX has come down from the low 30’s to the mid 20’s in swift order. I would
suspect that we could see some resistance here. However, I don’t see enough of
an “edge†to make a trade here. Stay tuned.
