Defensive Success

Reading the Wall Street Journal this morning, their discussion of the treasury markets led me to believe that the treasuries would stay range bound until the FOMC meeting on the 13th. My original play was to fade any moves the bonds made. But, at 8:30 jobless claims were much higher than expected and consumer credit was down way more than expected. Both in my opinion signal the end of the economic expansion which would lead me to believe the FOMC will only raise the rates one more time. After this news the bonds have already increased but volume hasn't picked up yet so I will go long the bonds.

After the crushing blow the indices took yesterday and this good news in the bonds, I'm going to cautiously play the indices long. At 10:30 the Nat Gas EIA comes out and with the bitter winter coming the energy market has a strong grip on the stock market.

After starting out long in the indices I quickly got stopped out for a 3,000 dollar loss. Going into the EIA Nat Gas report I am learning from yesterday and going short the indices if there is a shortage of NG, but nothing if the the report if positive. I'd rather make a play on something that is going to effect the market than fade what is turning out to be a volatile market.

Something to note. I put in stops on the bonds within two ticks of my average price, assuming that the bonds don't move two ticks unless they are determined to go that direction. But an outsider came into the market and picked up my stop even thought the price didn't move. From now on I will keep my stops at 3 to 4 ticks to prevent this.

The bonds went up slightly and pulled back. The EIA report was as expected so I didn't play the Indices. After getting out of the bonds I made a poor 95.63, but I consider it a success because I learned from yesterday and kept my losses to a minimum.