February 18th, 2009

See DeCarley Trading’s “Trade Like a Girl” article in the March issue of Stocks Futures and Options Magazine!

Obama’s mortgage plan revives supply concerns

Bond traders were reminded of the U.S. governments massive need to borrow money by the new mortgage relief program outlined by the Obama administration. At least for now, fundamental weakness in the economy has been put on the back burner.

There were a handful of second tier economic reports this morning all of which outlined the dire circumstances that the U.S. economy is currently facing. Both Housing starts and building permits were reported to be lower than expected. This is also the case with industrial production and capacity utilization. However, the news that fueled traders came from the speeches delivered by President Obama and Fed chair Ben Bernanke. Despite the markets being on hold going into each of the events, neither seemed to deliver enough unaccounted for information to change impact the day’s overall sentiment. With that said, Bernanke noted that the government’s rescue efforts seem to be improving the strained credit markets and may have contributed to some of the weakness in Treasuries.

Coincidently, the recent rally stalled at key technical resistance areas and the market appears to be waiting for guidance from equities. I would be reluctant to risk money on the direction of Treasuries in the near term, but it if I were a more aggressive speculator I would have to play the downside in the next session or two. This is simply because the equity markets seem to be oversold and due for at least a temporary rally ahead of its option expiration, as well as the fact that Treasuries are facing significant technical barriers.

Major resistance in the Bond remains at 130’06 and again near 133’04. Should we see a rally to or near 133 I would feel much more comfortable being a bear. In the case of the 10 year note, 124’26 should have marked the upside ceiling but if the rally finds additional steam compliments of continued equity selling we could see 126 at which point I would become highly bearish.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.



Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.


Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Feb. 17 – Sell the Five-year note at 119’20

Eurodollar Futures Trading Recommendations

**There is unlimited risk in trading futures.

Feb. 17 – Buy the June Eurodollar at 98.62

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading



Local : 702-947-0701



*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

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. 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.