T-Bond trading comment (September 17, 2007)

Very low volume in front of the Fed tomorrow. We had, as we might have expeected, a very uneventful day. Like we did on Thursday and Friday, we tested supports in the morning before bouncing up after failing on the 112-16 level. This level has to be put in parallel with the level of
109-20/22 on the T-note. If we break that, we are ending the bull run started inJune. Otherwise, we stay in our double bottom scenario we outlined in our September 1st post.

Like the last two days, we opened the market with some half hearted runs to the upside but each run was met with a wave of selling. This pattern broke off after the Empire Manufacturing Index. We went to see the 113 level on the number and then plunged towards the lows of 112-16. The descent was pretty much straighforward but the 112-16 held on very strong bidding. After that, we started to go higher on low volume. Now the next hurdle is in tomorrow afternoon. In the meantime people will want to flat their positions ( if they still have some!) before the FED. So don't expect much action until then.

Tomorrow in addition to the FED, we have PPI. On our radar, are also Q3 results from Wall Street in the US that starts off tomorrow... It will be interesting to look at them. People expect to see a quarter as bad as in 2001.... Lastly don't forget that this week is option expiration week.