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"Tom's Trades" for Wednesday, August 10, 2005
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1: SEPTEMBER 30 YEAR T BOND
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USDU5 O=4-00 HI=4-10 LO=3-24 CL=4-08
As expected we got another .25 basis point advance in the discount rate. The notes of the meeting released later in the day are what moved the market. The announcement of the increase itself was absorbed by the market almost withiut a ripple. The FED stated that things are pretty much staus quo with more rate increases likely in subsequent meetings.
Many had expected or hoped we might be winding down on the increases. That does not appear to be the case. The major disconnect between short term rates (which is what the discount rate is) and longer term rates continues and in fact widens to some degree.
I bought 114-03 early on and was stopped at B/E. I bought -03 again a bit later and rode it up to -07 exiting at -05 for 2 ticks. Big whoop. I folded the tent at that point ... no sense tugging on Superman's cape.
The late runup tells me we may see some more strength tomorrow. I doubt we'll be courageous enough to push this beyond 115-00. But the answer is we don't know that to be fact. We'll continue playing our numbers and picking likely spots to be flat in the face of volatile circumstances and clip 'em for our daily take.
Tomorrow we'll be ready teddy at 114-16 or 114-00 and go from there. I think it will take the strength of the -00 and -16 to control price flow tomorrow so I will be reluctant to do anything at the quarters, -08 and -24. That is not to say I won't play them at all, only that I will want to see a non ambiguous setup to jump either one.
There is an auction of 5 year notes tomorrow. If that is not enthusiastically covered we could see some weakness seep into things. The auction deadline is 12 noon Central. Be wary around that time.
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2: SEPTEMBER EURODOLLAR
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EDU5 O=.990 HI=.005 LO=.990 CL=.000
Status quo for now. I moved the stop today to 96.010. I would not sell in here. You're either in all ready or stay flat for a bit.
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3: SEPTEMBER CANADIAN DOLLAR
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CDU5 O=43 HI=58 LO=29 CL=47
I bought 8237. It was hopping all over, I was very uncomfortable and feeling definitely out of touch of the markets pulse. I got spooked a bit and jumped out at 8246 picking up $90. I'll stay with the same number for tomorrow.
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4: SEPTEMBER Swiss Franc
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SFU5 O=69 HI=72 LO=42 CL=64
Never saw our ambush point. Same 7930 for tomorrow plus I will buy a break above 7972.
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5: SEPTEMBER MINI RUSSELL 2000
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ERTM5 O=2.00 HI=5.10 LO=8.90 CL=2.90
As the window opened we sold the failure just below 665.00 at 664.50 and exited at 663.10 for $140. We clawed back to 665 so I sold again, this time at 664.60. We got a candle that freaked me out a tad so I'm out at B/E. Next we sold 664.30 and exited at 661.60 for $270. Right back up to 665 again ... hey, this is fun, fun , fun ... we sold 664.40 and when we broke below 661 I put in a 660.10 limit. It was hit. We are out with $430. Nice. I then bought 660.30 and bailed at 662.60 capping off the day with another $230. All done.
The full array of TT numbers for tomorrow plus we've added 668 to the mix.
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6: DECEMBER GOLD
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GCZ5 O=9.40 H=0.00 L=8.40 CL=9.80
I sold 438.60 on almost a picture perfect setup of the $10 Gold channel. Just one problem ... it didn't work worth a tinker's you know what. The darn thing turned on me faster than lifting off the gas in the middle of a corner in an early 911. Whoa! It went back to 439.30 and dropped again but ran out of steam at 438.50. It wouldn't break 438 letting me get to B/E. I bailed at 439.20 by cancel/replacing my stop from 439.70 to market. A $60 loss. The end.
$10 channel and 443 again tomorrow.
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7: DECEMBER COTTON
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CTZ5 O=.20 HI=.45 LO=.00 CL=.14
We had a little fun here today. I bought 51.10 on the reopen. Reversed by selling 2 at 51.40 banking 30 points and getting short. I reversed again exiting the short at 51.05 for another 35 and getting long. This one was stopped at 51.03 for a small 2 point loss. I packed it in at that point netting 63 ticks for $315.
All the same numbers from TT and this weeks updates again tomorrow
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8: SEPTEMBER COCOA
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COU5 O=25 HI=25 LO=98 CL=02
Nothing today. I'll bring back the numbers from 2 editions of TT back. 1440, 1400 and 1420. Do not sell the break below 1400 though.
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9: DECEMBER CORN
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CZ5 O=2.35 HI=2.39 1/2 LO=2.35 CL=2.35 3/4
Nothing today. I'll roll with 2.30 and 2.38 tomorrow. Buy 'em or sell 'em ... the market will tell us which. Penny and quarter stops and rolls to B/E. A scalper we be.
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10: DECEMBER WHEAT
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WZ5 O=3.38 1/2 HI=3.40 LO=3.36 1/2 CL=3.37 1/2
Big gap ... well, relatively speaking. Didn't get high enough; didn't get low enough.
TT numbers from the weekend for tomorrow.
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