Thursday, November 1, 2012

What do to after the month-end pop?

So, yesterday (Oct 31, month-end) the UST market (ZN) rallied to a local high at exactly 3pm, 2 ticks above the top of the locally defined bell curve (133-00). 

Readers of this blog should know that we expect this (a UST rally into month-end) to ultimately present an opportunity to change our game plan from buying dips to selling pops.  We are now always looking for ways to get short the long-end ahead of the next 30yr bond auction, and we use the ZN contract to help us gauge directionality of the market.

We won't take a position into Friday's NFP, but we do trade the price action leading up to it, and we will trade the price action after.

So, did anybody out there make a sale at 3pm yesterday?  Give me a shout out...

Govttrader out...


  1. govt great work.... would you say getting short at 1421 on the ES would be advisable?

  2. Honestly, with all this talk about the storm increasing retail sales, i can't tell where ES will stop. Normally, the generic catch-phrase regarding a recession is, "there's nothing like a good war to make the stock market rally." Is there some similarity to natural disasters? The fact that the storm hit the northeast where a lot of money managers live may increase the "nearness" of this effect (as opposed to "out of sight, out of mind").

    So, after saying that...i'm not touching stocks. In general, like most traders i know, i'm long term bearish on the US (global) economy until the deleveraging process is over, but trading US Treasuries is just so much easier, why give yourself heartburn if you don't have to?

    That said, if you have some genius technical model to trade stocks with..go at it. I'm more comfortable trading stocks only when the stars align and the trade makes perfect sense to me. That does not describe how i feel when i think about selling stocks'm staying away.