Tuesday, March 31, 2015

Treasury Bears Sleeping, But Where Are Bulls

It may be time to start charging the bullish usfi contingency with making some headway.  They have been driving the bus since March 9th or 10th and had made good statement initially, but the echo of that sounding is rather faint as price and volume languish. 

Month end considerations, employment statistics and a holiday schedule combine to make current trade a challenge to interpret.  Keeping it simple may help.  The low volume recovery since last Tuesday/Wednesday bearish reverse is noted as suspect.  The extremely modest recovery makes the advance further questionable. 

Yesterday’s volume was only 55% of the 15 day average for Eurodollars and 75% for 10yr Treasury futures.  Certainly it was a Monday during a period many are taking holiday, so we don’t want to be too harsh on the bulls for yesterday’s performance. 

Finally, let’s consider the other side of the equation.  Without exception, labor has been the one bright spot on the economic calendar for months.  Given the forthcoming monthly employment statistics on Friday, were is the bearish contingent.  They have had their best days in the aftermath of employment data for months and should be expected to be positioning in front of another expected onslaught, yet they remain quiet. 

My research has shown that the price action in the two sessions prior to the employment report can be telling as to the strength of prevailing trends, offer insight into the conviction of position holders and shed light on how trade may presume following the employment report irrespective of its particulars.  Today month-end considerations may dominate trade, but tomorrow and Thursday we may learn if there are offside positions to reconcile in front of the employment data.    

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