Friday, October 23, 2015

EDH6 Is Worth a Close Look

EDH6: I can understand why someone would want to sell EDH6 at 99.52 today (risking a settle at 99.535 or higher).  The low print for the last 5 sessions has been 99.525.  That was the contract high settle until October 14th.  Only minutes ago and on modest volume this morning, EDH6 traded to a new low by a full basis point.

The sideways trade over the last 8 sessions did not confirm the bullish advance on Oct 14th but does remove any short-term overbought conditions.  That Oct 14th, 4 bp advance was reversed the following session and subsequent bullish price action has been modest and fleeting. 

Technically, the two session price action which includes the recent Oct 14 high, formed a bearish ‘dark cloud cover’.  The two session period ending Oct 20th formed a ‘bearish engulfing’.  These patterns caution a pull-back.  Finally, a bullish trend-line advance dating from September 25th appears likely to fall today as EDH6 would need to settle at or above 99.535 in order to maintain that trend support.   

Time will tell if recent price action is simply an additional small concession in a consolidation that will end in another in a long series of near-expiry contracts march toward zero policy rates.  If as indicated EDH6 settles 99.535 or better today, we would be less inclined to expect near-term weakness in this contract.  Otherwise, for as little as appears to be the cost of admission, this contract may offer exciting prospects for someone who envisions stronger Q4 growth. 

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