carterdayne/E+ via Getty Images
The luck of the Irish came a day early yesterday. June T-Note futures hit and then fell below our recent downside target of 124-00 before recovering on the Fed’s announcement of a 25 basis point rate hike. Can T-Notes fall further? Certainly. The Fed is now officially in tightening mode. The punch bowl is gone. The party is over.
The depressing economic fallout from the war in Ukraine is often cited as the reason the Fed will not tighten as much as investors fear. But the war also causes supply shortages, which increase inflationary pressures. The UK has just announced another rate hike. The European Union should not be far behind. T-Notes are in a bear market hence our bias will remain bearish.
Reuters/Datastream
Use a corrective jump to recover from a bearish position
But that doesn’t mean we won’t see some impressive corrective rallies along the way. We will wait for one and use it to establish new bearish positions. T-Note futures are fast approaching oversold territory, so we wouldn’t be surprised to see a bounce soon. Our new Fibonacci derived downside target for T-Note futures is 121-00 in the front contract.
Our clients who have accepted our proposal to buy April 126-00 puts and who have not yet exited their positions should consider it immediately. Our April 126-00 T-Note puts settled for $1,812.50 yesterday. They’re going for $1,500 as of this writing. Consider placing a new order to buy June 124-00 T-Note put options at $656.25 or less as a replacement.
Your maximum risk is your entry price plus transaction costs. June 124-00 puts will be worth at least $3,000 should the market reach our new 121-00 target before the option expires on May 20, 2022. We need a dip in T-Notes to get filled on this trade.
Please note that you need a futures account to trade the markets in this post.
Visit the RMB Group to learn more.
This material was prepared by a sales or commercial employee or agent of RJ O’Brien & Associates (“RJO”)/RMB Group and is or has the nature of a solicitation. This material is not a research report prepared by any research department. By accepting this notice, you agree that you are an experienced user of the futures markets capable of making independent trading decisions and you agree that you will not and will not rely solely on this notice to make trading decisions .
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN INDIRECT POSSESSION OF THIS NOTICE SHOULD KNOW ABOUT AND BE AWARE OF ANY SUCH PROHIBITIONS OR RESTRICTIONS. TO THE EXTENT YOU RECEIVED THIS NOTICE INDIRECTLY AND YOUR JURISDICTION PROHIBITS INQUIRIES WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS NOTICE SHOULD NOT BE CONSIDERED AS AN INQUIRY.
The risk of loss when trading futures and/or options is significant and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical testing of strategies, is not indicative of future results. Trading advice is based on information from trading and statistical services and other sources that RJO/RMB believes to be reliable. We do not guarantee that this information is accurate or complete and should not be relied upon. Trading advice reflects our good faith judgment at any given time and is subject to change without notice. There is no guarantee that our advice will result in profitable trades.
Past performance is not necessarily indicative of future results. There is a risk of loss when trading futures and options. RMB Group does not recommend any system provider over another. By using this website you agree to the terms of use. A word about your privacy.
Copyright © 2022 All market data is provided by Barchart Solutions.
Futures: at least 10 minutes delay. Information is provided “as is” and for informational purposes only, not for commercial purposes or advice. Please see the Disclaimer for all exchange delays and terms of use.
© 2022 RMB GROUP ALL RIGHTS RESERVED
Original post
Publisher’s Note: The summary points for this article were selected by Seeking Alpha editors.
Comments are closed.