As of last Tuesday, both large and small speculators were holding roughly the largest net short position we've seen in the 10-year note in several years (or maybe ever). Since then, Treasuries have dribbled lower which suggests they are even more short now going into the employment report.
We can't think of a time in which the masses were ultimately right about a market direction (at least in the long run). Usually, markets do the opposite of what most believe they are going to do. We all know that trading isn't as easy as following the herd. We have to wonder whether this herd is heading to slaughter.
Treasury Futures Markets
Either speculators are due for a large pay day, or they are in for a rude awakening.
We think the latter is more likely (see comments in above section). Although estimates of tomorrow's payroll report are calling for an increase of 185,000 jobs the whisper numbers are coming in at 300,000 to 350,000. It feels like Treasury traders are pricing in this type of upside surprise, but they had better be careful what they wish for. At some point, the market is going to run out of sellers and a bearish report could reveal this. Our guess is that could occur as the 30-year bond reaches the 145'200ish level and about 122'0 in the 10-year note.
Treasury Futures Market Analysis
**Bond Futures Market Consensus:** We'll probably see another spike lower but we will likely start to favor the upside around 145'20 in the ZB and 122'0 in the ZN.
**Technical Support:** ZB : 145'20 ZN: 121'29
**Technical Resistance:** ZB: 150'01, 152'06, and 152'25 ZN: 123'29, 125'06 and 126'0
Stock Index Futures
It's all about jobs for ES futures
If the whisper numbers of 300,000 or higher jobs become a reality, we suspect the stock market will get a temporary boost. However, as reality sets in that "hot" jobs numbers equate to more aggressive Fed rate hikes, we think some of the "fluff" might be taken out of the market. In other words, any large rally on the payroll report might be an opportunity for the bears.
If you are a bear, you should be aware that a retest of the 2400 area is a possibility, but the upside is probably limited to 2400/2410ish for now.
If you are following our short call option trade, we've peeled off some of the risk by buying back the April 2430 call while the market was quiet. We are still holding short May 2450 calls.
Stock Index Futures Market Ideas
**e-mini S&P Futures Market Consensus:**
Trade feels different. It "feels" heavy...and PEs are historically high. A "normal" market would correct into the 2345 area and maybe as low as 2300ish.
***We are now charting the March contract!**
**Technical Support:** 2346, 2307,and 2249
**Technical Resistance:** 2400, 2410, and 2421
e-mini S&P Futures Day Trading Ideas
**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
ES Day Trade Sell Levels: 2367, 2383, 2397, and 2405
ES Day Trade Buy Levels: 2355 and 2345
Carley GarnerDeCarley Trading (a division of Zaner)
www.HigherProbabilityCommodityTradingBook.com **There is substantial risk of loss in trading futures and options.** These recommendations are a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years. There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in a similar directional manner during a certain calendar year. While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing. Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations. No representation is being made that price patterns will recur in the future.