Commodity Chart Of The Day: 10-Year Notes

by: Matthew Bradbard

The fluctuation in yields has been similar to watching paint dry in the last 3 weeks. As seen on the chart above of 10-year notes, pricing has been sideways. Remember, there is an inverse relationship, so when prices go higher, yields go lower. My stance is we will trade higher from the current base, which would mean yields should track lower. We are probing the 9 and 20 day MAs as I deliver this piece. It will take a penetration of the down sloping trend line just above current trade.

I suggest using the Fibonacci levels, as seen on this chart, as your objectives on any bullish trades. It is not a whole lot of reward, as a move to the 50% Fib level would only amount to about $1000 appreciation per futures contract. The reality is, the risk should only be about half of that, though I'm using stops under the recent lows, so I guess it fits the bill for a trade -- $1 of inherent risk for $2 of perceived profit.

If securities ever trade lower like I've been shouting for weeks, we should see the flow of money out of stocks and into Treasuries. To some extent, I am speaking my position, as I think equities should correct. I likely will not take this trade for clients, but if I am correct, it should lift the short end of the curve as well -- euro-dollars to a level where I would like to re-establish bearish trade in longer-dated contracts… stay tuned.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.