Friday, December 23, 2011

Treasury Futures Trade

With equity market grinding higher into the end of the year, treasuries are on the defensive. This, by all means, is merely a retracement in a stubborn bull market in treasuries. I see a possible further weakness in 10-yr T-note futures down to 129'09 level.

While this weakness is due to Eurozone debt crisis relief equity rally and also some unwanted supply at auctions during the week, it will take more than just a two-point T-note futures sell-off to convince me that risk is out of the woods.

There is a laminate of 50/100 dsma a few ticks away from current price. Stop scoop will give traders an extra reason to drive the price down below to my projected target.
You can see from the chart below that price is traveling inside the channel, head and shoulders has developed, and box extensions are near perfect. Do not get carried away though, this bull is not dead yet.

click on chart to enlarge

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