Two days of quiet trade in both the bond and SP/YM markets. It stands to reason, as neither day had any economic reports to entice traders to trade…and of course the East Coast weather Wednesday didn’t help. But I feel there is more going on: a lot of consternation over the upcoming FOMC statement.
When markets bog down this early leading into significant events, we need to remind ourselves that the actual event will provide plenty of trading opportunity – so in the meantime we need to stay patient and, as the saying goes, “keep our powder dry.”
A few years back (I don’t recall what year, but it was during the months when crude oil was a significant driver of the YM) there was very, very little bond trade for a few months. I remember contemplating adding a few more markets to trade; it was that slow. Then Lehman and Bear and Fannie and Freddie and AIG et al. came along and we had markets even the graybeards on the floor never experienced before.
I’m not saying next week’s FOMC does all that – but I do think the match is being lit.
And that why what the old floor veteran said today really got my attention and why I shared it with the MTS room. For those who missed it, he said: Know when to trade big, trade small, or not at all. Important lessons I’m still trying to master.
This from a guy who is a great stock option player who had a cup of tea in the Dow pit before moving to the screen. (I stood by him in the Dow pit in the late ’90s.) He’s been trading since his teens – but note he says ‘still trying to master.” I have to add, this guy races boats and cars and flies airplanes -and he told me the toughest thing he ever did was trading.
It’s 2:55pm CT Wednesday, my bond and note levels are ready for tonight/tomorrow – and I’m waiting for the SPs to close. It looks like there will not be any MiM trade; I see a discussion about the lack of volume.
So for 10YR notes on Thursday pivot off 124.045; it will provide us with direction. If the bulls can edge trade up through 124.205 they can test resistance at 124.26. The bears will do better if they can take out support (GOOD support) at 123.235; I will favor that move to target 123.05.
Vikram will likely email me and ask if I want to include a chart with this. I talked to a group on my break today and they asked about charts. Charts are useful to me in mainly two ways: when I prepare for the next session(s), and in the course of the day to verify high/low prints (especially in a busy market). Sure, as the day unfolds I’ll watch to see how a chart forms…but I think newer traders need to know: No one in the financial pit (read pros) is looking at charts. Wean yourself off them! If you are new to trading, don’t get addicted to them! The quest for “show me a chart” reminds me of the guy who is given a Lamborghini, $50k, a month to play with it, and told to go to Vegas. And he won’t leave until he makes sure it has a GPS and AAA sends him a route.
