US TNote Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 01/26/10

Comment: This month five-year TNotes outperformed other maturities, and Bobls too, despite all that has been spouted about budget deficits (and maybe not surprising after December’s drubbing). This futures contract is back up to the 118.00 area, one standard deviation from the mean of the period of the chart above. The contract is somewhat overbought and momentum is now decidedly bullish. Today it is trying to push above a very thin Ichimoku ‘cloud’ and if successful would then provide support for a re-test of contract high.

Strategy: Buy at 118.00; tight stop below 117.16 to re-buy on a drop to 116.16. Add to longs on a daily close above 118.16 for 119.00 and then 120.00 where one should be wary of signs of instability.