November 4th, 2009  

Carley will be speaking at a Trader's Library event in Las Vegas during the Trader's Expo, check it out: http://www.traderslibrary.com/conferences/tlforum2009vegas/index.html  

Pre-Fed volatility non-existent  

It was a long day for bond and note traders.  The futures markets traded painfully sideways in anticipation of the FOMC interest rate decision.  At times it was difficult to determine whether my quote board was frozen with the long bond at 118'22 or if it was just that quiet.   

Prior to the Fed, the market was faced with bearish news.  The Treasury announced that it will be auctioning another new record issuance in notes and bonds next week.  Specifically, they will be selling $40 billion in 3-year notes, $25 billion in 10-year notes and $16 billion in 30-year bonds.  The auctions will take place on Monday, Tuesday and Thursday respectively.  Also keeping bond bulls under wraps is a resilient equity market.  On the other hand, the ISM index was a little worse than expected but was still in growth territory.   

As expected, the Fed chose to leave the overnight target rate at near 0 and they also noted that they intend to keep rates "exceptionally low for an extended period".  The news was relatively expected and seemed to give bond traders the green light to price in the recent (bearish) economic news.  

We have mentioning an overall neutral bias in the near-term but seasonals are still pointing higher.  Accordingly, today's dip might eventually create an attractive buying opportunity.  Our original support level in the 30-year bond was 117'15 or so; therefore, we will wait to see if such prices or lower print tomorrow.  We will be shopping for bullish opportunities tomorrow, but given the employment report looming on Friday we might choose to risk missing a trade as opposed to jumping in front of what could be a freight train.   

Look for the notes to decline to the 117 area; at these price we think that the 10-year begins to look attractive.  

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.  However, market analysis and commentary does.  Charts provided by Track 'n Trade, Gecko software.  

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.  

Treasury Bond and Note Option Trading Recommendations  

**There is unlimited risk in naked option selling.  

October 15 - Yesterday afternoon, our clients were advised to sell puts against a possible Thursday plunge.  We recommended to sell the December T-bond 112 and 113 puts for 20 and 26 ticks respectively, or about $312 and $406 before commissions and fees.   

October 20 - Our clients were recommended to exit the 112 puts near 6 ticks and the 113 puts near 8.  Fills on the 113 puts were coming in at 9, we recommended to make the 6 tick buyback on the 112's GTC.  Those that still have a short 113 put open, we recommend a GTC order to buy it back at 9 or 10.  

·         These orders have all been filled, you should  be out of this trade.  

Treasury Bond and Note Futures Trading Recommendations  

**There is unlimited risk in trading futures.  

Flat  

Carley Garner  

Senior Analyst / Commodity Broker  

DeCarley Trading  

cgarner@DeCarleyTrading.com  

1-866-790-TRADE  

Local : 702-947-0701  

www.CarleyGarnerTrading.com  

www.DeCarleyTrading.com  

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.  

There is substantial risk of loss in trading futures and options.  

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 and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities.  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.