A faint light is often all that is cast upon truly outstanding positioning strategies before they ready. Fundamental analysis, awareness of monetary policy developments, positioning conditions and other trend characteristics followed allow candlestick charting analysis to shine needed illumination. Martin B. McGuire
Wednesday, February 10, 2016
Eurodollar Future Longs; Additional 'Kink' in Bull Armor
Eurodollar and Treasury futures are lower in early
trade stateside.The dollar, global
equity market and even oil are relatively stable to slightly higher.Gold is lower.
The Treasury yield curve (5-30) flattened by 2 basis
points yesterday while the Eurodollar futures yield strip flattened throughout
the first 7 years.Volume was
modest.Open interest was higher in
Treasury TU, FV, TY and US (+34K, +30K, +29K and +3K respectively).In Eurodollar futures however, open interest
declined for a second session.
Over the last two sessions, Eurodollar future open
interest declined by over 218K.The last
time Eurodollar futures fell by this amount or more over a two session period,
where there was no expiring (roll off) of a contract, was in December
2014.Following that Dec ’14 open
interest decline, EDH7 fell by 35 basis points over the next 8 days.
Chair Yellen appears before the House Financial
Services panel this morning.Might she
say something that calms the market?
For whatever reason, the contingent of Eurodollar
longs, despite having the best 5 weeks in recent history has decided to remove
some of their position.This is not
trend friendly.There is little else
that indicates the bullish advance is coming to an end.
There was a bearish ‘shooting star’ pattern
developed in many Eurodollar and Treasury contracts by price action on Tuesday.
These will be confirmed if prices remain lower today.For EDH7, a bullish trend line support is
noted at 99.175.A settle under this
level provide an indication of lost momentum.