Commodity TRADING SCHOOL
COMMODITY TRADING SCHOOL FUTURES MARKET SUMMARY 01/12/10
SUMMARY OF UPCOMING DATA 01/13/10
10:30 AM EIA PETROLEUM INVENTORY REPORT
1:00 PM US 10 YEAR NOTE AUCTION ($25 B)
2:00 PM BEIGE BOOK RELEASE
DATA RESULTS 01/12/10
US INTERNATIONAL TRADE (-$36.5B/-$35B)
US 3 YEAR NOTE AUCTION ($40B)-BID TO COVER 2.95, YIELD AWARDED 1.490%
US DEBT REVIEW AND OUTLOOK
US 30 YEAR FUTURES broke out to the upside on Tuesday. The March contract rebounded off recent support levels (after failing to significantly pierce the 115-00 handle). The rebound was fueled by a new wave of uncertainty which hit most of the leading recovery sectors simultaneously.
Earnings concerns were brought to light after Alcoa’s earnings feel significantly short of expectations (EPS 0.01 vs.0.06 estimate). Risk tolerance fell away after China announced further increases policies designed to curb bank lending and control growth. The financial sector came under pressure after the Obama administration was rumored to be considering new taxes and fees on the banking industry for the purpose of repaying TARP funds. The alignment of these factors fueled a greater than expected flight to quality. In addition, Tuesday’s 3 year note auction was generated a better than expected reception. The bid to cover was very strong at 2.95 and the yield awarded was nearly 20 basis points below Monday’s yield. Expected uncertainty (a contradiction in terms anywhere except the financial markets) was the catalyst for a rebound in Treasuries and the uncertainty may fuel further gains.
Technically, March 30 year futures should continue higher, testing the 117-08 level, with 117-22 and 118-11 setting up as significant resistance levels. Downside target remains at 114-09.
US EQUITY REVIEW AND OUTLOOK
US EQUITIES staged an overdue retreat after a number of elements fueled a new wave of uncertainty which hit most of the leading recovery sectors simultaneously.
Earnings concerns were brought to light after Alcoa’s earnings feel significantly short of expectations (EPS 0.01 vs.0.06 estimate). Risk tolerance fell away after China announced further increases policies designed to curb bank lending and control growth. The financial sector came under pressure after the Obama administration was rumored to be considering new taxes and fees on the banking industry for the purpose of repaying TARP funds. The alignment of these factors fueled a greater than expected flight to quality as Treasuries staged their largest one day rally in over two months. Fund flow that normally enters the market after the first of the year has been anemic and left equities vulnerable to profit taking. Traders and investors are also looking down the barrel of a potentially disappointing earnings season that may be open to pullbacks, though many feel this will be necessary for valuation to return to a more realistic level.
Technically, March S&P futures should return to a narrow trade range ahead of the retail sales figures on Thursday. Near term range should set up with support at 1126.00 and resistance at 1138.80. 1117.50 remains a significant breakout support level while 1144.00 should be a strong target level for movement above 1150.00. Earnings should begin to have an influence on the next focus of market sentiment by next week. Be aware of likely increase in volatility as the traders seek to return.
|
US DEBT FUTURES |
OPEN |
HIGH |
LOW |
CHANGE |
|
|
US H0 (US 30 YRS) |
115-08 |
116-30 |
115-08 |
116-28 |
+1 22/32nds |
|
SP H0 (S&P 500) |
1135.00 |
1137.60 |
1127.80 |
1133.90 |
-8.60 |
|
|
|
|
|
|
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Prepared by Rich Roscelli & Paul Brittain.
PLEASE VOICE YOUR MARKET, OPTIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
