Buying Opportunity in T-Notes?
After putting in a bottom in mid-October, T-notes have rallied sharply higher. Patient bulls have been afforded few opportunities to enter the contracts on a pullback, but that may soon change. Pullbacks are a healthy part of any sustained rally, as they allow market participants to take profits from longer held positions, and reallocate capital in the direction of the prevailing trend.
Fundamental Snapshot:
T-Note prices are inversely related to yields - meaning that as yields decline, the price of T-Notes will rise. After the last Fed meeting, Chair Powell suggested that the Fed may be cutting rates as much as 3 times in 2024. As displayed on CME’s FedWatch Tool below, the market is pricing in a 77.2% probability that the first rate cut may come as soon as March. If that materializes, T-note prices should continue to press higher.
Talkin’ Technicals:
The white line on the bottom of the chart labeling short-term bearish divergence on RSI in the bottom indicates that the market is making successive new highs on decreasing momentum, and that the market remains in overbought territory. Meaning that the current rally is effectively running out of steam. Furthermore, volume has steadily decreased since the previous high. If there are no more bulls willing to enter the market, it will likely result in a pullback. A pullback on price will force current bulls to liquidate long positions to capture profit, and afford new bulls to enter the market amidst the correction. Fed policy is a major function in establishing the longer-term trend in T-notes and bonds. By lowering rates in 2024, one should expect both T-notes and bonds to perform well pricewise.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Fundamental Snapshot:
T-Note prices are inversely related to yields - meaning that as yields decline, the price of T-Notes will rise. After the last Fed meeting, Chair Powell suggested that the Fed may be cutting rates as much as 3 times in 2024. As displayed on CME’s FedWatch Tool below, the market is pricing in a 77.2% probability that the first rate cut may come as soon as March. If that materializes, T-note prices should continue to press higher.
Talkin’ Technicals:
The white line on the bottom of the chart labeling short-term bearish divergence on RSI in the bottom indicates that the market is making successive new highs on decreasing momentum, and that the market remains in overbought territory. Meaning that the current rally is effectively running out of steam. Furthermore, volume has steadily decreased since the previous high. If there are no more bulls willing to enter the market, it will likely result in a pullback. A pullback on price will force current bulls to liquidate long positions to capture profit, and afford new bulls to enter the market amidst the correction. Fed policy is a major function in establishing the longer-term trend in T-notes and bonds. By lowering rates in 2024, one should expect both T-notes and bonds to perform well pricewise.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.