US TNote Future – March 2010

Nicole Elliott from Mizuho Corporate Bank at 02/02/10

Comment: The US yield curve continues incredibly steep, yields in the middle of the band of the last eight months. This futures contract is still struggling with the 118.00 area, one standard deviation from the mean of the period of the chart above and ‘cloud’ resistance on the weekly continuation chart. On a positive note the contract is no longer overbought, momentum is decidedly bullish, and on Friday it managed a close above the top of the daily Ichimoku ‘cloud’. If not this week then some time this month we favour a re-test of contract high.

Strategy: Buy at 117.24/117.16; stop below 117.00. 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.