March Treasury Bonds are down 12/32 at 114:27 this morning as I write. The included chart shows that March T-Bonds are in a near term steep decline coming off of the break of the neckline to the double top last week. The double top measures an initial downside price objective of 111:00. The directional movement indicators are bearish and the ADX line is rising. I am very happy with the current positions that we already have in place. The US Treasury Department will be busy raising more money to finance our national debt by having treasury auctions for 2 year notes today, 5 year notes tomorrow and 7 year notes on Wednesday. These shorter maturity auctions usually go well. It is the longer term maturities like the 10 year and the 30 year auctions that don’t go so well. The common theme amongst all the auctions is that every time they have an auction, the amount to be borrowed gets bigger since our national debt grows by leaps and bounds. Just how much appetite will foreigners or anyone else have over time for this paper, as our government needs to borrow more and more?
Followers should be:
Long one March Bond (114:00 strike) put option from 2 12/64. (Cost basis of 28/64, or $437.50, if you include the buy back of the two short 110:00 put options on December 8th).
Long one March Bond (108:00 strike) put option from 52/64. (Cost basis of 2/64, or $31.25, if you include the buy back of the two short 105:00 put options on December 8th).
Long one March Bond (117:00 strike) put option from 128/64.
Short one March Bond (113:00 strike) put option from 51/64.
March options expire in 53 days.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
