Political Trade 2
| PREVIOUS POSITIONS | ||||
|---|---|---|---|---|
| Market |
Long/Short |
Enter | size=2 color=000000>Exit | size=2 color=000000>P/L (per contract) |
| Sep. 99 T- bonds | Long | 115 | 115-07 | $218.75 |
| Sep. 99 S&Ps | Short | 1429 | 1410 | $4750 |
| Sep. 99 Swiss franc | Short | .6590 | .6585 | $62.50 |
CURRENT POSITIONS (AS OF 8/9/99) |
|||||
|---|---|---|---|---|---|
| Market | Date | Long/Short | Enter | Stop | size=2 color=000000>Target |
| Sep. 99 T-bonds | 8/10/99 | Long | 113-19 | 113-00 | – |
| Sep. 99 S&Ps | 8/10/99 | Long | 1285 | 1262 | – |
| Sep. 99 Swiss franc | – | Long | .6710 | .6630 | .6755 |
Note: All price levels are approximate.
T-bond futures
The September futures [USU9>USU9] followed through on the downward momentum from Friday, but there was not much news today to move the market. Trading was influenced more by technical factors, with more shorting by some large hedge funds and traders.
The Red Book report comes out tomorrow, which is closely watched by some very big bond investors. Volatility has started to pick up, but we don’t see much opportunity right now. Stay tuned.
UPDATE, 8/11/99: Went long USU9 at the 113 19/32 area with a stop in at the 113 area.
 |
| Figure 1. September T-bond futures (USU9), 10-minute bar. Source: FutureSource.
|
S&P 500 futures
The September contract [SPU9>SPU9] continues to be highly volatile. Friday’s PPI number should keep downward pressure on the market. However, we continue to look for a low-risk entry point. The market should trade in sharp, fast moves in this high-volatility environment. Most people are now classifying the current environment as a “correction phase.” Expect some sharp upside moves.
UPDATE, 8/11/99: Went long SPU9 today at the 1285 area with a stop in at the 1262 level.
 |
| Figure 2. September S&P futures (SPU9), 15-minute bar. Source: Quote.com.
|
Currency futures
The September Swiss franc [SFU9>SFU9] and Euro [ECU9>ECU9] fell a little today on political worries from Russia: Yeltsin replaced the prime minister yet again. This type of political shakeup usually makes investors nervous and today was no exception. Foreign investors, especially German, have significant investments in Russia, and whenever there is instability in Russia, the German currency (and now the Euro) usually experience selling pressure as investors move to the dollar until the situation stabilizes.
We do think, however, this type of event provides good trading opportunities because the market usually overreacts. As a result, we established a long position in the franc at the .6710 area with stops in around .6630. This is what we would call a “political trade.”
UPDATE, 8/11/99: Profit target set at the .6755 area.
 |
| Figure 3. September Swiss franc futures (SFU9), 15-minute bar. Source: Quote.com.
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Next scheduled update: Wednesday, August 11, 1999
(Check “Today’s Schedule” every day on our home page to find out about additional updates.)