Today is Columbus Day and so the financial markets such as T-Bonds may have less than normal volume today than normal.  The December Treasury Bond futures are up 7/32 this morning at 120:06.  This is following a very sharp price fall last Friday.  The enclosed chart shows that December Treasury Bonds have a lot of moving average support down here in the low 119:00 area.  Longer term up trend lines come in near the 117:00 area.  The directional movement indicators have collapsed on top of each other from being clearly bullish before.  It won’t take a lot of sell off from here to cause those indicators to cross to the bear side.  So, if they do cross bearish, I will look to see what my other indicators are saying and to see if some of these important trend lines are being violated.  Stay tuned.  For now, I recommend being flat in the bonds.  Last Friday I attempted to buy a deep out of the money ratio call spread but was unsuccessful in filling the order.  Today, I do not want to enter that order again.  We will just stand aside to determine if the trend isn’t changing.

Oct. 12, 2009
David Hall