TMV Could Bounce on Unemployment Report Volatility

The monthly unemployment report often leads to volatility in the stock and bond markets. Treasuries could provide a trading opportunity with Direxion Daily 20+ Yr Treasury Bear 3X Shares (NYSE: TMV) signaling a potential buy.

Treasuries have traded within a relatively narrow range in the past few weeks as the interest rate on the ten-year Treasury encountered resistance at 3%. That resistance level held this week after minutes from the most recent meeting was released showing that some officials would like to scale back the pace of the Fed’s bond purchases. The Fed decided to pursue a gradual reduction in its purchases unless the economic recovery accelerates. The December employment report will offer the first new data since the minutes were released and could trigger volatility in bonds. Unexpectedly good news could push interest rates up if traders become concerned that the Fed will scale back further. As rates rise, bond prices fall and TMV, an inverse fund, would rise.

TMV ended trading yesterday with a PowerRatings of 9.


PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.

In the past, buying stocks with *a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.

TMV should be considered a buy under $67.82.

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All data is as of the end of day January 9, 2014