T-Bond trading comment (October 1, 2007)

It looks like we are pulling away to the upside... But beware, we haven't passed the 112 mark which is a resistance line as well as the monthly moving average. We arrived this morning at our offices while the market was trading unchanged after an earlier challenge to the upside. With no specific data before 10h00, the market drifetd aimlessly in a little range on low volume... At 10h00, we had ISM indexes, they were a tad lower and this gave some fuel to the bulls to run-up prices but we failed at the 111-26 line. After that, we drifted back lower to sit on the preceding top, made just before 10h in the 111-16 zone. This support holding, we tried again to the upside but with the afternoon coming to an end we failed on the 111-28 line which, by the way is the level on which we failed on Friday... 112 seems to be a bit tough to overpass right now.

So what is in the books for tomorrow ? On the economic front, nothing big with only pending home sales. But equities have closed at a record high (Dow Jones) and we have the 112 line standing in front of the bulls, so let's say that right now the odds are skewed to the downside...

Today was the first trading day of the month, this means it was time to put on iron butterflies. The strikes 109-111-113 were retained and the first stop is either 112-7 or 110-7. The price was pretty steep in comparison with 2007 & 2006 prices but again market is a bit more volatile right now and this month, the option is a bit longer than usual. We will see what will happen.