Inside Edge Research from Charles Cochran

Market didn’t break out, nor break. The impact of the emini S&P Futures pushed the Bond between support and resistance, three times as the market filled in volume between 113-06 and 113-30. The saddle formation contained the Bond as it usually does when there is no new news. The focus remains economic activity news and the ES’s reaction to that news. Likely to be the same next week. FOMC interest rate decision on 10-31-07. The futures markets are saying there is a 100% probability of a ¼ point cut. We will see. Credit problems continue and rate relief is the fastest way to offer relief. This news is built into today’s prices. An interest rate cut combined w/disappointing economic news could take the Bond to 114-28/115-00 quickly. Still see the Bond higher and the ES lower over time.


F1 Comments: Market still trading in a range. ES is market’s focus and whipping Bond around. As long as volume continues build above 113-06. Long term bias remains higher.

F2 Comments: Market traded between the High Volume (HV) nodes at 113-06 and 113-30 in a slow, Low Volume (LV) day. The session ended in a “b” pattern. The market is pointed lower, if the emini S&P continues this afternoon’s rally. The Fed will speak this week on interest rates. If they cut rates, it is supportive for equities and financials. No news on Monday. If the ES is lower, we want to buy the bond. If he ES is higher, we want to sell the Bond. Sell zone is 113-15/19. Buy zone is 113-05/09 w/a back up buy at 112-29/113-01. Today’s market might be the best day for trading until the Fed speaks.


F4 Comments: Analysis was to trade the market from both sides. Market ran its range 3 times. Multiple buys and sells.