AmenRa's Corner

A place where a skillful caddy always offers cool contemplation when it comes to your "stick" selection

Creditcane™: I'll be back. Enjoying my staycation.

SPX
Spinning top day. Previous gap is resistance (and is futile). Still below the SMA(55). Midpoint below EMA(10). Below the trendline (3/6/09-5/25/10) & (2/5/10-5/6/10). No daily 3LB changes (reversal is 1127.24). QE2infinity.



DXY
Bearish short day. Tested and failed the SMA(144). Midpoint above EMA(10). The 85.11 (fibo .1459) has been violated and the 80.95 (fib .09) has been defeated. No daily 3LB changes (reversal is 80.60).



VIX
Bearish short day. Midpoint above EMA(10). Still holding below weekly 3LB mid but above monthly 3LB mid. Still below the SMA(89) but above the SMA(144). No daily 3LB changes (reversal is 22.01).



GOLD
Bullish long day. Above the SMA(21), the SMA(89) and the SMA(55). Midpoint above EMA(10). New high on daily 3LB (reversal is 1197.90).



EURUSD
Bullish short day. Midpoint below the EMA(10). Still below 1.2935 (fib .1459) and the 38.2% retrace. Still below the 3x1 Gann. Still above the trendline (11/27/09-3/17/10). No daily 3LB changes (reversal is 1.3231).



JNK
Bullish long day. Closed at the 61.8% retrace. Back above the SMA(89) and held the SMA(144). Midpoint below EMA(10). No daily 3LB changes (reversal is 37.72).



10YR YIELD
Bearish long day. New gap is new resistance. Made new 0.0% fibo retrace at 25.73. Midpoint way below EMA(10). Below all SMA's. New low on daily 3LB (reversal is 28.22).



AUDJPY
Spinning top day. Back below the SMA(55). Midpoint below EMA(10). Tested and held the 23.6% retrace at 75.5696. No daily 3LB changes (reversal is 79.1783).



DJ TRANS AVG
Doji day (right at the trendline). Below the SMA(55) and SMA(144). Midpoint below EMA(10). No daily 3LB changes (reversal is 4452.13).




LUMBER
Bearish short day. Still below the SMA(21). Still below the weekly 3LB mid. Midpoint below EMA(10). No daily 3LB changes (reversal is 194.60).



XRT
Bullish short day (or a bullish thrusting continuation pattern). Midpoint below EMA(10). Still below all SMA's. No daily 3LB changes (reversal is 39.11).

LEFTBACK'S BOND REPORT

The Bond Report 8.16.10

Just another average day in the fixed income markets, as one or more prop desks had their heads ripped off and inserted in places that were anatomically entirely less appropriate, except perhaps in a Cubist representation. Morgan Stanley meets Picasso.

The 10y and 30y ripped skyward, buying reportedly initiated by MBS holders hedging against early payoff risk, and then amplified by short covering from the aforementioned distressed desk which has had a certain degree of difficulty unwinding a 2s10s steepener, well from about 90 bps back. Oooh, that smarts...! Do it again !! We love being spanked every day !!!

Even more fun followed as the word spread that BOFA was playing a flattener in 10s30s and some wags then started to buy the 10y faster than the 30y, with the result that it all became rather frenetic at the end, and some traders may have ended up tired and emotional.

Overall it was a banner day for bonds across the board, with IG crushing and HY also performing well, especially at the shorter end, where spreads narrowed in the 5y window, although actions at the long end was a bit more distorted. Even TIPS rallied, as confused punters hedged against deflation, inflation, reflation, stagflation and there was a lot of plain old hyperventilation.

Corpies: LQD 1.10%; AGG 0.33%; JNK 0.52%; HYG 0.13%;
Govies: TLT 2.50%; IEI 0.32%; TIP 0.33%

We sold the last of our long T-bonds and laughed our socks off at the carnage that was occurring in certain corners. Hedges are on here for us, we still have a lot of F/I exposure and a snap back in yields can't be ruled out, and that would be nasty. But the most likely play is a reach for yield, and a move out along the risk curve seems imminent, so a "spread tightener" is our guess for the next trend.