More IOU Sales

by Larry Levin

Today was so slow ("how slow was it!?") that most of the day seemed slower than even Christmas Eve! As I looked at a 10-minute chart of the pit traded S&P500 futures, I saw several entire 10-minute "bars" that contained one single trade. Said another way, these "bars" were more like dash marks; they were not open, high, low, close bars...just a dash (one trade).

Today's only real news was the latest IOU issued by the US Treasury. The massive $44 billion 2-YR Note IOU didn't go over as well as previous sales.

Bloomberg said the following...

Treasury two-year note yields reached the highest levels since October as an investor class that includes foreign central banks bought the least of the debt in five months at today's record-tying $44 billion auction.

Indirect bidders purchased 34.8 percent of the notes, the lowest amount since July, and below the average for the past 10 sales of 45 percent. Treasuries of all maturities have fallen 3.6 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since at least 1978, when Merrill began collecting the data.

Less money overall is bidding on US debt but specifically less foreign central bank money is buying US debt. And this is on the short end of the yield curve! Because of this the Treasury had to dangle the highest yield for a 2-YR Note since October.

The upcoming 5 and 7-YR Note auctions could be interesting.



Previous Day's Trading Room Results:

Trade Date: 12/28/09

E-Mini S&P Trades*
(before fees and commissions):


1) VA sell @ 2:46pm at 1122.00 = -0.50 (1 lot)

2) Algorithm positions (0)

3) "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...-0.25



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!