Either the mode has shifted...or we just saw a transition to trending

At the moment, it looks like 132-25 --> 132-27+ is the contender price range for a new mode, with 132-26 in the lead by a single stride.  Today we received the CFTC commitment of traders report for the week ended Aug 14.  This gives us a pretty clear picture of what happened last week.  Does it help us with this week?  I think it does.

Aug. 22 (Bloomberg) -- Non-commercial net positions in 10- yr Treasury futures most net long since Jan. 17; JPMorgan Treasury Client Survey unchanged this week, shows shorts near 2012 lows; primary dealer Treasury net long position smaller than previously; SMR Money Manager Survey shows increase in duration risk exposure.
●    CFTC Commitments of Traders (week ended Aug. 14)
●    TU non-commercial net position, futures only: Long 149,116 contracts, least bullish since July 10
●    FV non-commercial net position, futures only: Long 109,630, least bullish since July 10
●    TY non-commercial net position, futures only: Long 32,336 contracts vs net short 14,595; most net long since Jan. 17
●    US non-commercial net position, futures only: Long 20,808 contracts, least bullish since May 15
●    WN non-commercial net position, futures only: Long 19,702 contracts, least bullish since May 22

The period just after this data saw a selloff in 10Y yields from 1.50% to 1.85%.  Its safe to say that this selloff shook out all the weak-handed longs.  So now, strong hands are safe to come in and buy US treasuries in size (most likely, RM has already been buying into the weakness).  This tells me that buying dips in treasuries should be the trade du jour.

What does Market Profile tell us?

The stability of Market Profile over the past week indicates that the treasury market has found support from fresh buyers...taking product off the hands of weak handed sellers.  These are not the large fast levered money type of buyers...rather this is RM.  This means that the market is ripe for a levered player to buy a dip if we get one, in size.  If the opportunity arises, this levered player buying a dip will be encumbering fresh levered sellers (the marginal seller who will provide liquidity) in a manner that could cause an under supply condition to arise.  This would be a close to perfect setup.  Whether we will see such an opportunity is impossible to know.  What we know is that if we see the opportunity...we know how to trade it.

My fear is that we won't see another dip to buy in this cycle (it could be argued that we already saw it...and that was yesterdays trade).  Only time will tell.

govttrader out...