Look for Long Opportunity In T-bonds After Fed Meeting
| CURRENT POSITIONS (as of 5/7/99) | ||||
|---|---|---|---|---|
| Market | Long/Short | Entry | Stop | Target |
| June T-bonds | Flat | – | – | – |
| June S&Ps | Flat | – | – | – |
| June Swiss franc | Short | .6754 | .6800 | .6690 |
Note: All price levels are approximate.
Currency futures
The June Swiss franc [SFM9>SFM9] and Euro [ECM9>ECM9] both dropped today after strong gains the last couple of sessions. We established our shorts yesterday (Thursday, May 6) at the .6754 level. Stops are in at the .6800 level and our profit target is around .6690. The Balkans conflict seems to be moving towards a resolution and any such progress over the weekend would trigger a rally in the European currencies. Stay tuned.
Figure 2. June Swiss franc futures (SFM9), 15-minute bar. Source: Quote.com.
S&P 500 futures
The June contract [SPM9>SPM9] closed up today after a volatile week. We’re still flat as the market has given us no good entry points for a low-risk trade. The stock market will be looking at the bonds very carefully next week, and if bonds keep falling, it should drag down stocks.
T-bond futures
The June futures [USM9>USM9] gave back earlier gains after rallying in the morning after the U.S. Non-Farm Payroll report showed an increase of 234,000 jobs in April. The market relief was short-lived, as traders and investors analyzed the details of the report and concluded the economy still remains strong.
Bonds ended down on the day and made new lows for the week. Many bulls temporarily threw in the towel today as the Fed gets ready to meet; they will want to wait until after the meeting to reassess their views. Our studies indicate there will be a buying opportunity if the June contract dips down below the 118 level.
Next scheduled update: Monday, May 10, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)