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MrTopStep gives futures traders a view from within. From the floor of the CME to trading screens, experienced professional traders offer their observations, insight and knowledge to help you improve your mastery of the markets.
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  • Yankee Ingenuity And The Bond Gorilla 0 comments
    Jul 23, 2012 12:26 PM

    If I believe anything in life it's that Americans don't take losing sitting down. We try, try, and try again. I am tired of talking about how bad it is. We all know the lowdown and it's not good, but I don't want to hear about how bad it is, I want to know how we are going to fix it. If Medicaid and Medicare and Social Security are going to go bust, is it not the government's responsibility to come up with a plan? How is the government going to knock down the national debt and get things back on track again? With all the smart people in this country, we need to find the right people to run the country, stop the divisions and start using what we are known for - ingenuity!

    I do worry about how this debt is going to be passed on. I worry about how long the U.S. can continue to be the global sheriff and not pay attention to our own problems at home. I am just a small guy, but I do plan things. I started in the trading business in the grain room working from 9:30 to 1:15 when I was a kid. Then to the bond room from 7:20 to 2:00 and then to the S&P from 8:30 to 3:15. Before the credit crisis I had a plan. Put together all the cash I have, buy a small second house in Florida and start to split up time between Chicago and my new home. Now I work from 5 a.m. to as late as 10 or 11 p.m. Most days are an easy 12 to 14 hours. I have to. While there are no guarantees, I believe that by working the extra hours I have a better chance of getting back up on my feet than sitting around not trying to make things happen. I never wanted to retire early, but I did want to slow it down. After 35 years on the floor and all the fighting and pushing, I wanted to scale back, but now I have no choice. I must go to battle every day.

    What we have learned is that the total effects of the credit crisis have not been fully felt yet. That like a cancer it continues to eat away at the American way of life. I know there is not going to be an easy fix, but how do we plan a future when things are so messed up? What we do know is we cannot allow history to repeat itself. That we can't let our kids get fooled the way we have.

    By: Danny Riley

    BONDS THE 800LB GORILLA WITH A 1357 ESU~SPX FUTURES JUNE MONTH END TEST
    So as we kick off 80% of the S&P500 reporting this coming week & expiration behind us, what looks like clear sailing, there is a "white elephant" in the pits & it's in the BOND market. Even as we bounced from 1320 to 1375 GAP FILL in the last week, some +3%, the BONDS didn't give up much at all. So as SPX & equity traders you always need to look over your shoulder to see what could be wrong or the thesis of others in other trading markets. The bond market appears to be disagreeing with the UPSIDE move over the 1374.00-1375.00 GAP FILL. Heed the WARNING: SPX Bulls Need To Break The BOND BULLS.

    Write these NUMBERS down as they are important & REVIEW THESE CHARTS.

    1357.00 SEPT futures was JUNE MONTH-END CLOSE as you need to know where the month SPX % began & ended. JUNE 29 HIGHS TEST was 1359.50 / with 7/02 first day of July closed 1359.50 <-- IMPORTANT #. YANKEE INGENUITY AND THE BOND GORILLA futures, trading, commodities, trader, invest, speculate, SP500, dow, nasdaq, Treasury, Bond, Note, Newsletter, education, risk, reward, stock market, bond market

    TLT $130.28 / SPY $136.36 WIDEST SPREAD FRIDAY / PICK YOUR POISON / pair it up / SPX cash low / 1357.20 prints / TLT highs $130.28 BONDS HIGHS TEST YANKEE INGENUITY AND THE BOND GORILLA futures, trading, commodities, trader, invest, speculate, SP500, dow, nasdaq, Treasury, Bond, Note, Newsletter, education, risk, reward, stock market, bond market

    Our view:
    Coming into today, the S&P is up 8.35% on the year. After a big selloff down to 1262, the SPU traded back up to 1375 on Thursday. After a one-week rally the SPU sold off on expiration Friday, just like the stats said it would. In most cases if you close weak on an expiration, Monday is weak. This morning the markets are also getting hit by more fear. Italian shares are down sharply, with six banks and insurance company Generali suspended from trading. We gave you the Pit Bull Thursday low at 1320 and we reminded people that 1375 was a double top. Then we gave you Friday's weak stats along with the Pit Bull's comment that he has seen the S&P top in the third or fourth week of July. We also said last week as the earnings wind down that the markets would refocus on Europe. This morning the S&P is sharply lower. It's our guess we see a bounce at some point this morning, but you can take it from there. As always, keep an eye on the 10-handle rule and please make sure to use stops.

    For today:

    • It's 6:00 a.m. and the ESU is down 13.75 handles at 1344.50, crude is down 2.68 at 89.15 and the EC is trading 1.2131, down 37.
    • In Asia 10 of 11 markets closed lower (Hang Seng -2.99%).
    • In Europe 11 out of 12 markets are trading lower (CAC -1.97%, DAX -1.57%).
    • The main headline this morning: "Italian Markets Gripped by Fear Again."
    • Economic calendar: Chicago Fed nat'l activity index and earnings from McDonald's, Halliburton, Hasbro, Baidu, Texas Instruments
    • VOLUME: 1.97mil ESU and 13.7k SPU traded
    • SPREADS: 150 SPU/Z spreads traded
    • FAIR VALUE: S&P -16.00, Nasdaq -34.00

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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