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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (29876)	4/7/2006 11:39:42 PM
From: Return to Sender	Respond to of 95616

I would have to agree. Bonds should be ripe for a reversal making a good short term trade soon. But longer term rates are still low on a historical basis. RtS

To: BWAC who wrote (29876)	4/8/2006 10:05:42 AM
From: Return to Sender	Respond to of 95616

SENTIMENT JOURNAL: Let’s Talk About Bonds By Frederic Ruffy, Optionetics.com 4/7/2006 3:45 PM EST optionetics.com Market Internals: The stock market has reverted back to the familiar pattern of low volatility and quiet trading. During the past six trading sessions, the average daily point move in the Dow Jones Industrial Average ($INDU) has been just 40 points. The NASDAQ Composite Index ($COMPQ) is trading without much volatility as well. It has moved three points or less during four of the past six trading days. Sentiment Data: Given the choppy trading and lack of movement in the stock market lately, let’s talk about sentiment in the bond market. Treasury prices have been falling precipitously for the past few weeks and the yield on the benchmark Ten-Year Treasury note is now near 4.9%, its highest levels since June 2004. Yet, despite the recent bloodshed in bondland, there seems to be no indication that investors are worried or that there have been very many traders looking to play Treasuries to the downside. In fact, there seems to be a consensus building that the worst may be over for the Ten-year and this bullishness towards bonds is visible in a number of ways. For example, on Wednesday, only 85,087 puts traded on the ten-year futures contract, compared to 72,479 calls. That represents the least amount of put volume in the ten-year since March 17 and one of the lowest readings in the past few months. Meanwhile, the put to call ratio fell to 1.17 on the day. The ten-day average is reading 1.6 and is well below its early March high of 2.19. Normally, one would expect to see put volume increase during a period of falling prices. Not so in the case of the Ten-year Treasury note. The put to call ratio has been declining along with Treasury prices. Similarly, on Wednesday, only 574 puts traded on the iShares Long-term Bond Fund (TLT). The TLT is one of the most widely used tools for retail investors to trade the bond market. By way of comparison, on March 2, more than 18,000 TLT puts traded. On March 3, another 16,500. In short, 574 contracts represents extremely light volume for the TLT. The absence of put activity in this exchange traded fund is another sign that investors are not too concerned about the possibility of further losses in the Treasury market. Meanwhile, the Rydex Juno Fund continues to lose assets despite the losses in the Treasury market. The fund is designed to move in the opposite direction to Treasury prices, with slightly more volatility. During the past few weeks, the total assets in the fund have fallen from $1.555 billion to $1.516 billion. Juno's Net Asset Value [NAV] has increased from $18.94 a share to $19.69 during that time. So, although the fund has been performing well, investors are not adding new money: yet another sign that bearishness is not rising as bond prices fall. The latest Commitment of Traders [COT] report shows no meaningful increase in short positions. In fact, since March 7, the total short positions in Ten Years held by large and small speculators has fallen from 963,332 contracts to 864,969 contracts. Finally, the implied volatility in the Ten-Year options remains anemic. It sits near 4.25%, compared to more than 5% when Treasuries were ready to rally in November 2005. Implied volatility continues to trend lower and premiums are cheap, and this is another sign of investor complacency in the Treasury market. So, despite a recent tumble in bond prices, along with the accompanied spike in yields, sentiment remains remarkably complacent. From a contrarian view, this is not a positive for the Treasury market. Instead, it seems to suggest that investors are unfazed by the latest fall in prices. That, in turn, sets the table for possible volatility in the Ten-Year as Friday’s unemployment report and other economic data are released going forward. If so, it is also possible that that volatility (higher rates) spills over into the stock market.