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ZB1! trade ideas

30-Year Bond Trendline Back-TestMany are considering the Fed actions as a pivot, but the Fed could look to to continue to tighten policy and maintain a hawkish approach. The 30-year bond futures have been in a steady uptrend going back to 1999, holding strong trendline support, until April when we saw a break below the trendline. This week, we are looking to back-test this breakdown level which now acts as strong resistance after the bounce off the 200-day moving average. As we continue to retest these strong levels, keep an eye out for the Jobs data coming out Friday to give a catalyst to the bond market back above the trendline or back towards the 200-day moving average.
CBOT:ZB1!
by Ryan_Gorman
T-Bonds Are Beginning Minute Wave 3 With Bearish SeasonalityT-bonds should begin minute wave 3 any day now. T-bonds should experience severe resistance from the trend line that started forming on April 13 and from Ichimoku's leading span B, which is at about the same level as the trend line. Over the past ten years, t-bonds have had bearish seasonality from June 8 until August 23. If you bought and sold t-bonds on these dates every year for the past ten years, you would have lost money for 9 out of 10 of those years. Except for minor wave 4 that occurred during this time, it appears that this year has followed a similar pattern. On June 8 this year, t-bonds closed at 136'30. I would say that based on seasonality alone, there is a 90% chance prices will close below 136'30 this year on August 23. When we consider minor wave 5, which appears to have begun on July 6-7, I would say there is an incredibly high probability that prices will close below 131'01 before its completion. This analysis will be voided if prices rise above 142'06. In this case, it will appear that t-bonds are making a five-wave move up, which has a much more bullish outlook.
CBOT:ZB1!Short
by epistemophiliac
Ugly Markets - Embrace the TrendsThe trend is always our best friend in markets across all asset classes. While many investors and traders waste their time interpreting the new cycle and other factors, the path of least resistance of market prices is a real-time indicator of the current sentiment. Stocks and bonds fall in Q2 Four of six commodity sectors post losses Rising interest rates and a strong dollar Economic contraction- Copper tells a story Go with the flow Market prices rise when buyers are more aggressive than sellers and fall when sellers dominate buyers. The current price of any asset is always the correct price because it is the level where buyers and sellers agree on value in a transparent environment, the marketplace. The results for Q2 were ugly in most markets. Stocks and bonds fell, the dollar index rose, and four of six commodity sectors posted losses. The best performing sectors reflect the supply-side issues created by the war in Ukraine, sanctions on Russia, and Russian retaliation. Uncertainty in markets creates price variance, and markets reflect the economic and geopolitical landscapes. As we move into the second half of 2022, uncertainty is at the highest level in years. Meanwhile, market liquidity tends to decline during the summer vacation months. Lower participation only exacerbates price variance as bids can disappear during selloffs and offers often evaporate during rallies. It is a time for caution in markets across all asset classes, but the trends on a simple price chart tell us all we need to know about the path of least resistance of prices. Stocks and bonds fall in Q2 The stock market was ugly in Q2: The DJIA fell 11.25% The S&P 500 declined 16.45% The tech-heavy NASDAQ dropped 22.45% Over the first half of 2022: The DJIA was down 15.31% The S&P 500 fell 20.58% The NASDAQ plunged 29.51% As the Fed began increasing the Fed Funds Rate and reducing its swollen balance sheet, the US 30-Year Treasury bond futures fell 8.19% in Q2 and were 13.75% lower over the first half of this year as of June 30. The long bond fell below its technical support level at the October 2018 136-16 low and reached 132-09 in June before bouncing. Four of six commodity sectors post losses While the energy and animal protein sectors posted gains in Q2, base and precious metals, grains, and soft commodities moved to the downside. The quarterly results by sector were: Energy- +6.77% Animal proteins- +3.31% Gains- -3.46% Soft commodities- -4.12% Precious metals- -12.91% Base metals- -27.24% Over the first half of 2022, four of six sectors were higher than at the end of 2021: Energy- +43.86% Grains- +14.65% Animal proteins- +10.96% Soft commodities- +1.46% Precious metals - -5.43% Base metals- -13.07% The results reflect the economic and political landscapes. Energy and food prices rose as the war in Ukraine threatens the global supply chains. Metal prices declined because central bank policies and economic conditions led to rising rates and a strong US dollar. Rising interest rates and a strong dollar The US Federal Reserve blamed rising prices and inflation on “transitory” pandemic-related factors throughout most of 2021. The central bank waited far too long to address inflation and is now playing catch-up when the war in Ukraine and geopolitical tensions impact the global economy’s supply side. Central bank monetary policy can affect the demand-side, but they have few tools to manage supply-side shocks. The rise in energy and food and the decline in metal prices tell us that central banks are struggling to address the current economic landscape. The US 30-Year Treasury bond futures chart shows the pattern of lower highs and lower lows. While the long bond bounced from the June low, the bearish trend remains intact in early July. The US dollar index, which measures the US currency against other world reserve foreign exchange instruments, rose 6.21% in Q2 and was 9.28% higher over the first half of 2022. The dollar index settled at the 104.464 level on June 30 and rose to a new two-decade high of 107.615 on July 8. Since the US dollar is the world’s reserve currency and the pricing benchmark for most commodities, a strong dollar caused raw materials to rise in other currencies, putting downward pressure on dollar-based prices. Economic contraction- Copper tells a story The US remains the world’s leading economy. In Q1, US GDP fell, and it likely declined in Q2. The textbook definition of a recession is two consecutive quarterly GDP declines. Copper is a base metal that trades on the London Metals Exchange and the CME’s COMEX division. Copper has a long history of diagnosing the economic climate, earning it the nickname Doctor Copper. In Q1, COMEX and LME copper prices rose by around 6.5%. In Q2, they plunged, with the COMEX futures falling 21.82% and the LME forwards dropping 20.41%. COMEX and LME copper prices were down over 15% over the first half of 2022. The chart of COMEX copper futures shows the move to an all-time $5.01 per pound high in March 2022 and a decline to a low below $3.40 in early July. The descent below technical support at the August 2021 $3.98 low and nearly 30% drop as of July 8 are signs that recession is not on the horizon; it has already gripped the economy. Go with the flow Inflation remains at a four-decade high, and while raw material prices have declined, the economic condition is far higher than the current Fed Funds rate. The central bank has pledged to fight inflation with monetary policy tools. Higher interest rates could put more downward pressure on raw material prices and the stock market as the economy contracts. Time will tell if the Fed continues its hawkish path or reacts to current market conditions. Waiting far too long to address inflation in 2021 suggests the central bank will likely remain hawkish regardless of market conditions in 2022. It is impossible to pick tops or bottoms in any market as prices often rise or fall far beyond where logic, reason, and rational analysis dictate. A market participant’s most effective tool is to follow the trends until they bend. The path of least resistance of asset prices can be the most significant factor for future performance. In these troubled times, where uncertainty is at the highest level in years, don’t fight the trends and go with the flow. In early Q2, it remains bearish in many markets across all asset classes. Stocks, bonds, commodities, cryptos, and other asset classes are making lower highs and lower lows, while the dollar index is moving in the opposite direction. Markets are ugly, but nothing lasts forever. Trend following can be the best route for capturing the most significant moves. You will never buy the lows or sell the highs when following trends, as they will cause short positions at bottoms and long positions at market tops. However, trend-following allows for extracting a substantial percentage from a significant price move. Embrace those trends until they change. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
CBOT:ZB1!Education
by Andy_Hecht
U.S. Bonds – It’s Major Uptrend Has Broke BelowU.S Bonds market is larger than the largest American companies combined, therefore it is important to also track the health of the bonds market. • U.S Bonds size - market value estimated $46 trillion • Largest American companies size - market capitalization estimated $42 trillion The bonds market moves in tandem with the stock markets, meaning when the general trend of the bonds is up, so will be the stock markets. Similarly, when the bond markets are bear, so will the stocks. The decades of U.S. Bonds uptrend were broken in the month April 2022. This indicates a long-term downtrend for the bond markets. Source and reference: As of 08 Jul 2022 from companiesmarketcap in U.S. The total companies 6,332, total market cap: $81.241T. The largest American companies by market cap, 3,269 companies 3,269, total market cap: $41.66 T. As of 2021, the size of the bond market (total debt outstanding) is estimated to be at $119 trillion worldwide and $46 trillion for the US market, according to Securities Industry and Financial Markets Association (SIFMA). Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. Feel free to leave any comments below, I love to exchange ideas with you. Also to check the video link below...
CBOT:ZB1!Short
by konhow
U.S. Bonds & Stocks is ready for a rebound, why?One of the ways to determine U.S. stocks and indices’ direction in the long-term is to also know where the U.S. bonds markets are heading. Why? This is because the US bonds, its market capitalization can be as large as all the U.S. stocks market combined; therefore, it is also as important to also track its direction. In the macro trend over generations, the bonds move in tandem with the stocks market, meaning if bonds are heading up, the stocks market will likely follow. • Where is the main trend of the 30 Years T-Bond? • Why is the stocks market due for a rebound in the coming week? For this demonstration, I am using the CBOT U.S. 30 years T Bond Futures. If you are interested to research and explore into other treasuries tenures and the yield curve, under symbol search, Futures tab – search for Bonds, Notes or Yields. Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CBOT:ZB1!Long
by konhow
Sell 30 years bonds at Market - 1st TP 134.18 - stop 141.06Sell 30 years bonds at Market - 1st TP 134.18 - stop 141.06 **Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performance is not indicative of future results** hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown. in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. one of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. in addition, hypothetical trading does no involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. there are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.
CBOT:ZB1!Short
by Cannon-Trading
Jamie Dimon’s Hurricane and the Bond Market in Early JuneIn 2021, as the US central bank and the Secretary of the Treasury continued to call rising inflation a “transitory” and pandemic-inspired event, the bond market declined. Bonds watched prices rise while the economists were pouring over stale data. Meanwhile, the Fed and government planted inflationary seeds that sprouted during the second half of 2020, bloomed in 2021, and grew into wild weeds in 2022. The consumer and producer price data began to flash a warning sign in 2021, with the economic condition rising to the highest level in over four decades. The Fed and the Treasury finally woke up. While the Biden administration was already “woke,” the data awakened them to a point where late last month, Treasury Secretary Janet Yellen admitted “transitory” was a mistake. However, there was no admission and self-realization that monetary and fiscal policies created the inflation, and ignoring the warning signs only made it worse. A storm forecast from JP Morgan Chase’s leader Bonds are sitting near the lows The Fed’s FOMC meets on June 14 and 15 Higher rates are on the horizon Expect lots of volatility in markets The bond market was far ahead of the Fed and the Treasury, which should have been another warning sign. Consumer and producer prices have skyrocketed, and the central bank is using demand-side tools to address the economic fallout. Meanwhile, the war in Ukraine, sanctions on Russia, and Russian retaliation have only exacerbated the inflationary pressures, as they create supply-side issues making demand-side solutions impotent. The Biden administration blames the rise in energy prices on Russia, but they were already rising before the invasion and sanctions. The shift in US energy policy to a greener path is equally responsible for record-high gasoline and other fuel prices. At the end of 2021, a conventional 30-Year fixed-rate mortgage was just below the 3% level, and in less than six months, it rose to 5.5%. On a $300,000 loan, the move increases the monthly payment by $625, a significant rise. We are in the early days of an economic storm that began with the pandemic, continued with a lethargic Fed and government officials, and was exacerbated by the first major war in Europe since WW II. We have not seen the peak of the storm clouds gathering for more than two years. A storm forecast from JP Morgan Chase’s leader Jamie Dimon, the Chairman and CEO of JP Morgan Chase, called Bitcoin a “fraud.” A few short years ago, he said he would fire any trader “stupid” enough to trade cryptocurrencies on the bank’s behalf. As recently as late 2021, he said he believes Bitcoin is “worthless.” So far, he has been dead wrong on the asset class. The financial institution he heads replaced real estate with cryptocurrencies in late May, calling them a “preferred alternative asset.” In his latest comments on markets across all asset classes, Mr. Dimon issued a warning. Quantitative tightening that will ramp up to $95 billion in reduced Fed bond holdings and the Ukraine war led him to tell market participants, “You’d better brace yourself. JP Morgan is bracing ourselves, and we’re going to be very conservative with our balance sheet.” He began by saying, “You know, I said there’s storm clouds, but I’m going to change it…it’s a hurricane.” Mr. Dimon believes QT and the war create substantial changes in the global flow of funds, with an uncertain impact. The leading US bank’s CEO is prepared for “at a minimum, huge volatility.” His forecast on cryptos aside, the warning is a call to action. There is still time to hedge portfolios and establish a plan for the coming storm. Volatility is a nightmare for passive inventors, but it creates a paradise of opportunities for nimble disciplined traders with their fingers on the pulse of markets. Bonds are sitting near the lows Quantitative tightening not only removes the put under the bond market that had supported government-issued fixed income instruments since early 2020, but it also puts downward pressure on bonds and upward pressure on interest rates further out along the yield curve. The long-term chart of the US 30-Year Treasury bond futures highlights the decline to the most recent low of 134-30, declining below the October 2018 136-16 low, and falling to the lowest level since July 2014. At the 135-20 level on June 10, the bonds are sitting close to an eight-year low, with the next technical support level at the December 2013 127-23 low. The Fed’s FOMC meets on June 14 and 15 The market expects the US Federal Reserve to increase the Fed Funds Rate by 50 basis points this week at the June meeting. The move will put the short-term rate at the 1.25% to 1.50% level. The Fed remains far behind the inflationary curve, with CPI and PPI data at an over four-decade high and coming in hotter each past month. While the central bank determines the short-term rate, the bond market has been screaming for the Fed to catch up, warning that inflationary pressures were mounting. The bottom fell out of the long bond futures in 2022 as the Fed began to tighten credit. However, the Fed’s economists will only put the short-term rate at 1.50%, with inflation running at many times that level. A 75 basis move to 1.75% would shock the market, which is not a path the Central Bank wants to follow. Higher rates are on the horizon The Fed may have awakened, realizing it must use monetary policy tools to address inflation, but the central bank remains groggy and slow to adjust rates to levels that would choke off rising prices. The economists do not have an easy job as they face supply-side economic problems created by the war in Ukraine. Had they been more agile in 2021 and nipped the rising inflation in the bud with a series of rate hikes, the US Fed would be better positioned to address what has become a no-win situation. The war has caused energy and food prices to soar with no central bank tools to manage the situation. Last week, gasoline rose to a new high, crude oil was over $120 per barrel, natural gas was over $9.65 per MMBtu, and grain prices remained at elevated levels. Rate hikes and lower bond prices are not likely to cause prices to fall as US energy policy, sanctions on Russia, and Russian retaliation are supply-side issues that leave the central bank with few answers. Higher food and energy prices will keep the inflationary spiral going and will continue to push bond prices lower. Expect lots of volatility in markets The US and the world face an unprecedented period that began with the 2020 global pandemic. Artificially low interest rates and the government stimulus that addressed the pandemic were inflationary seeds. The pandemic-inspired supply chain bottlenecks exacerbated the inflationary pressures. A shift in US energy policy increased OPEC and Russia’s pricing power in traditional energy markets. Meanwhile, the war in Ukraine has turbocharged the economic condition, making a solution challenging for the central bank. The current US Treasury Secretary, and former Fed Chair, Janet Yellen, once said that monetary policy works together with the government’s fiscal policies. In the current environment, fiscal policy and the geopolitical landscape have become the most significant factors for rising inflation. Jamie Dimon is worried, and the head of the leading US financial institution is battening down the hatches on his balance sheet for a storm. Even though he was mistaken about cryptos, we should heed his warning and hope he is wrong. Markets reflect the economic and geopolitical landscapes, which are highly uncertain in June 2022. Hedge those portfolios, and make sure you develop a plan for any risk positions. Expect the unexpected because 2022 is anything but a typical year in markets across all asset classes. Fasten your seatbelts for what could be a wild and turbulent ride over the coming months. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
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CBOT:ZB1!Education
by Andy_Hecht
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