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111-ICT Mentorship Core Content - Month 11 - Bond Mega-Trades

Last modified by Drunk Monkey on 2022-10-29 06:36
1 00:00:12,420 --> 00:00:26,820 ICT: Welcome back, folks, July 2017, ICT mentorship, this is the final lesson for July's content, making trades in the bond market. Alright, and when we go
2 00:00:26,820 --> 00:00:36,840 into the bond market, we're gonna be looking at, much like everything else we've looked at for this month content. We're looking for seasonal tendencies. And
3 00:00:36,840 --> 00:00:50,670 seasonal tendencies are very specific with the bond market, because it's a very pitting phenomenon that takes place every year. And this is the seasonal
4 00:00:50,670 --> 00:01:00,900 tendency for the bonds of 30 year treasuries. And obviously, there's generally some measure of weakness starting in the beginning of the year, and trades down
5 00:01:00,900 --> 00:01:13,950 into some seasonal low, it takes place between the May and June months. So sometimes on May and or June, every year, there's a seasonal load of forms,
6 00:01:14,520 --> 00:01:26,130 generally, again, between the months of May and June. So this is the number one set up that I want you to be looking for every year. Now, before I state
7 00:01:26,130 --> 00:01:39,030 anything further than I already have. Just because we have a May, June seasonal tendency low that historically can be seen doesn't mean every single year is
8 00:01:39,030 --> 00:01:48,840 going to create a seasonal low for the bond market in May and or in June, it just means that we have to be looking for this to potentially be there. So if
9 00:01:48,840 --> 00:01:58,980 there's going to be a decision based on whether you're gonna be looking for a big move the bond market where they're shorting or going long. I think if you do
10 00:01:58,980 --> 00:02:11,670 the analysis and study over historical price data, you'll see that May June, traditionally has a very high odds of making a low, that is not a guarantee,
11 00:02:11,670 --> 00:02:25,680 it's not a panacea, it'd be all end all idea. It's not 100%. So if you go in forcing it, chances are you're going to lose money. Okay? So I want you to focus
12 00:02:25,680 --> 00:02:36,600 primarily on May June time period, every single year for the formation of a low in the bond market. Now, you can anticipate weakness, the beginning of the year
13 00:02:36,630 --> 00:02:47,370 down into this May June time period. That's one way you can look for H turning scenario, okay. Or you can simply sit on your hands and wait till May in June of
14 00:02:47,370 --> 00:02:59,970 every year, anticipate the technicals to get in line with the fundamentals, which shows this statistically proven. There's more chance of a seasonal low
15 00:02:59,970 --> 00:03:13,110 forming in the spring, early summer in the bond market than any other time of the year. Later in the year, there's the September October November, rallies
16 00:03:13,110 --> 00:03:22,560 that take place you can see there's two significant intermediate term lows of form. And they're generally short term in nature. So you can be a short term
17 00:03:22,560 --> 00:03:34,050 swing trader or just a short term trader and anticipate bullishness in those time periods, but the primary one I want you to focus on for mega trades is the
18 00:03:34,050 --> 00:03:35,940 May June time period for bonds.
19 00:03:41,340 --> 00:03:51,600 Okay, we've mentioned that multiple times throughout this mentorship. But the interest rate SMT is going to be that little silver bullet you're looking for,
20 00:03:51,960 --> 00:04:03,120 for qualifying and confirming that the megatrade itself is actually unfolding. That treasury bond markets routinely a trending market historically, you can see
21 00:04:03,120 --> 00:04:10,590 that over long periods of time, bonds typically will move in a trending environment. Now it doesn't mean they won't go into consolidations, it just
22 00:04:10,590 --> 00:04:21,090 generally means that as a characteristic for this asset. It's Historically and traditionally, a good trending market, it tends to stay in a long term trend for
23 00:04:21,090 --> 00:04:32,190 a while. Now when seeking mega trades in bonds. It's crucial to refer to the five year 10 year notes comparably with 30 year bond market. Now this
24 00:04:32,190 --> 00:04:42,120 application of relative strength analysis will aid in timing with the smart money actually stepped in and buys the bond market in large magnitude. It's one
25 00:04:42,120 --> 00:04:51,480 thing to anticipate the seasonal low in May in June, and that's enough to give you a statistical edge edge is not 100% it just means that you have a
26 00:04:51,480 --> 00:05:02,670 statistical edge that more times than not there's usually a seasonal low forming between May and June. Over the counter The year for the bond market now doesn't
27 00:05:02,670 --> 00:05:14,550 mean that it goes up the rest of the year. No, it just means that you have a potential to see a significant rally to occur from the May June lows that can't
28 00:05:14,580 --> 00:05:24,600 be qualified until you see an SMT divergence across the five year, the 10 year and the 30 year bond market. So what does it look like?
29 00:05:29,880 --> 00:05:40,710 Well, when you look for megatrade, okay, I'm going to simplify it in similar fashion you've seen so far for the previous three lessons. The first thing
30 00:05:40,710 --> 00:05:51,960 you're looking for is a seasonal tendency that forms in late spring, early summer, which is the May June bond low. Next stages, you're going to be looking
31 00:05:51,960 --> 00:06:01,770 for identifying institutional order flow, you're gonna be waiting for a higher timeframe, institutional PD, right? Now, what you're waiting for is you're going
32 00:06:01,770 --> 00:06:11,370 to anticipate bullishness on a seasonal tendency, between May and June, you're gonna identify institutional order flow, you may be waiting for signs to
33 00:06:11,370 --> 00:06:22,260 indicate that on a higher timeframe that the market should be looking for higher prices. And when the market goes into a discount market, now you have a stage
34 00:06:22,260 --> 00:06:32,280 that's properly set. Now you're gonna be performing a daily scan for the interest rate SMT divergence between the five year the 10 year and a 30 year
35 00:06:34,260 --> 00:06:42,030 once you get an entry based on institution order flow, and entry techniques that we've covered in other parts of this mentorship, and that are going to be
36 00:06:42,030 --> 00:06:53,100 specifically spelled out in your August content PDF, top down analysis, you'll be anticipating a move or duration that takes us into the fall months. So the
37 00:06:53,100 --> 00:07:03,330 fall highs. That's generally what you're aiming for, it does not mean that the bond market's gonna rally that long, it just may rally a month or two. But
38 00:07:03,330 --> 00:07:15,510 generally, we're waiting for the September October time period, to anticipate some measure of intermediate term highs to perform. After that, short term
39 00:07:15,510 --> 00:07:26,610 trading begins from a characteristic standpoint for the bonds. And each year, you want to be doing this as a routine. But the main thing is, is you do not
40 00:07:26,610 --> 00:07:38,970 want to over trade the bonds, you want to be looking for this May June time period to begin the trend over the next several calendar months. If you do this,
41 00:07:39,030 --> 00:07:48,630 if you sit on your hands and you wait for this to come to fruition, you number one will develop discipline, you'll have a clear objective approach about how to
42 00:07:48,630 --> 00:08:02,880 trade the bonds. And it's, as you'll see, very consistent with giving a long term swing traders model, a long term position traders model. And if you trade
43 00:08:02,880 --> 00:08:14,880 in a direction that this method gives you. You can also do day trades and one shot one kills in the direction as well. So it gives you the basis for trading
44 00:08:14,880 --> 00:08:26,670 the bond market entirely for all aspects of short term day trading, scalping, you swing trading and position trading. You can't ask for anything more. This is
45 00:08:26,670 --> 00:08:41,880 a reason why I say that for last. Bonds are a pet market of mine that I have very close. Love for basically, a like I said, if I was forced out of forex, if
46 00:08:41,880 --> 00:08:51,180 Forex just became untradable, I'd go right back to the bond market. And I'm confident that I would do very well with it. Do I want to go back to the bond
47 00:08:51,180 --> 00:09:02,010 market? No, I don't. Because I'm passionate about the foreign exchange market because I think it's loaded with manipulation. So therefore I know what those
48 00:09:02,010 --> 00:09:11,310 manipulations are. If it becomes impossible for me, I will have no problem leaving the asset class of the foreign exchange. And going back to trading
49 00:09:11,310 --> 00:09:24,900 commodity futures in the bond market and have absolutely zero fear or whether or not I'm going to be able to find consistency. By itself. That's a huge vote of
50 00:09:24,900 --> 00:09:35,100 confidence in myself as a trader, you may not have that. But you will develop it over time, especially if you're looking for big moves like this. Because if we
51 00:09:35,100 --> 00:09:43,890 get these big moves that start between May and June, and they go for long durations over several months. What that will do is it will fuel the other
52 00:09:43,890 --> 00:09:54,810 markets to allow them to go into training environments as well. If it does not come to fruition in May in June doesn't create a low that will also spell other
53 00:09:54,810 --> 00:10:05,160 things that we'll talk about in August PDF, notes and content that tells you what you should be doing. But primarily May June time period, we want to be
54 00:10:05,190 --> 00:10:12,750 anticipating a low forming in the bond market. And therefore a rally in the coming months after those May June lows form.
55 00:10:18,180 --> 00:10:29,760 Okay, we're looking at an example here of three specific bonds and notes that you have to be looking at the top is the five year treasury note. The middle
56 00:10:29,760 --> 00:10:41,220 chart is the 10 year treasury note. And the lowest is the 30 year treasury bond market. So when we're looking at price, okay, I want you to learn to train your
57 00:10:41,220 --> 00:10:52,290 eye to anticipate specific turning points. Now there's two turning points on here that I really want to draw your attention to. The first is the most
58 00:10:52,350 --> 00:11:03,510 furthest to the left of the chart. There's a swing high, retracement, and then another swing high forming. This is seen on all three of the charts. The
59 00:11:03,510 --> 00:11:16,710 uppermost five year Treasury has a higher swing high or high forming. And then the 10 year has a lower high forming end. And obviously the third year has a
60 00:11:16,710 --> 00:11:28,470 lower high for me as well. This confirms that down move, trading down into the low that's seen on all three charts. That low is what I want to draw your
61 00:11:28,470 --> 00:11:39,780 attention to. So while we see the divergence at the highs, which led to that deep retracement. How can we see that low? And why did it have such a response
62 00:11:40,440 --> 00:11:49,620 off that low? Well, we're going to take a look at that in greater detail. But right now, we're focusing primarily right there. So now looking at the five year
63 00:11:49,620 --> 00:12:03,480 at the top, you can see that the five year made a lower low. The tenure in the middle made a higher low. And the 30 year made almost equal lows. So there's a
64 00:12:03,480 --> 00:12:20,430 divergence or interest rate SMT divergence. And it's this divergence right here 10 year failed to make a lower low while the other two made either an attempt to
65 00:12:20,430 --> 00:12:32,580 go lower or equal low. The three bond markets or Treasury markets here, they have to move in concert with one another. If they diverge, and it just takes
66 00:12:32,580 --> 00:12:42,360 one, that is your early warning sign because the smart money does such a large volume of trading. When they step in and start buying, they're going to spread
67 00:12:42,360 --> 00:12:53,340 their risk over the short term to medium term and long term. Because of that, and because of their sheer volume and their order placement, there's going to be
68 00:12:53,340 --> 00:13:01,740 a crack in the correlation amongst the short term intermediate term. And the long term yields. Short term yields the five year intermediate term yield is the
69 00:13:01,740 --> 00:13:12,150 10 year and the 30 year is the long term yield. We're trading the 30 year bond or the 30 year yield. But we're using the short term and intermediate term and
70 00:13:12,150 --> 00:13:22,740 the long term yield in comparison to see when that Smart Money elephant presses its foot down in the mud. This is what it looks like. So we're going to use this
71 00:13:22,740 --> 00:13:32,190 example here. Working from the lower timeframe out to a higher timeframe to identify what this smart mine footprint looks like and how you can use it to
72 00:13:32,190 --> 00:13:46,830 frame mega trades. Okay, folks, this is the five year treasury note. And I want you to see that lower low here. Okay. And we're going to look at the 10 year.
73 00:13:48,990 --> 00:14:03,660 And you see that divergence right there. And we're gonna look at the 30 year treasury. You can see that's relatively equal. Okay. So the five year what lower
74 00:14:04,470 --> 00:14:17,160 the 10 year diverge. And the 30 year was basically unchanged or equal low. That in itself is SMT. This is the cracking the correlation that would be normally
75 00:14:17,160 --> 00:14:28,110 expected in the bond and Treasury markets. So the five year 10 year Treasury notes and 30 year bond market, they should be moving in tandem, but because
76 00:14:28,110 --> 00:14:39,000 they're not moving in tandem here. This draws special attention to what may be a smart money accumulation pattern. So now we're gonna do is we're gonna go out to
77 00:14:39,030 --> 00:14:51,150 a daily time period. Okay, and this is actually just looking at the month of June of 2008. And we're gonna look at 2008 2009 all the way up to 2017. Okay,
78 00:14:51,150 --> 00:15:04,290 here's the five year of the 2008 September contract. As you can see, the May June time And period we're looking for a seasonal, low to form and the low forms
79 00:15:04,290 --> 00:15:13,620 in June. Now I zoomed in on an intraday chart on the five year, 10 year and 30 year rate at this low. That's what we were just looking at in the previous
80 00:15:14,280 --> 00:15:18,780 charts. This is the 10 year or the same time period.
81 00:15:21,240 --> 00:15:34,260 And there's the 30 year treasury bond, again, the May June time period creating a seasonal low. The s&p divergence occurs down here, we could be a buyer around
82 00:15:34,290 --> 00:15:52,410 112 and a half or so Scott, one, two and a half. If that's the case, that would be 1-234-567-8910 11 $12,000 per contract have a move from the June seasonal
83 00:15:52,410 --> 00:16:03,030 tendency, just getting into September, at the contract expiration is done or delivery contract. Now, we're going to look at the December contracts throughout
84 00:16:03,030 --> 00:16:13,440 the rest of the remainder of this presentation. But I wanted to show you that in 2008, the seasonal tendency was in fact there. Okay. And we also saw that the
85 00:16:13,440 --> 00:16:24,570 September influence that was expected for short term trading, also saw a rally as well. We also see an early portion of the year, there's a decline that took
86 00:16:24,570 --> 00:16:35,490 place, trading down into that May June time period for the seasonal tendency to kick in. Now, I don't know about you. But $12,000 per contract is a rather
87 00:16:35,490 --> 00:16:47,220 significant return in a short order of time, one month, two months, three months of time to make $12,000 per contract, that is a megatrade. That's what it looks
88 00:16:47,220 --> 00:16:56,970 like in the bond market. So now what we're gonna do is we're going to take a look at the livery contract month of December 2008. And then we'll start working
89 00:16:56,970 --> 00:17:10,050 out from 2008 to 2017. Okay, now we can see the delivery contract of 2008. The December contract is the five year treasury. As you can see, we have basically
90 00:17:10,050 --> 00:17:20,940 equal or slightly higher low here while in consolidation. And we're in that September October time period, when seasonally we expect to see rallies occurs,
91 00:17:20,940 --> 00:17:34,890 well. I'm gonna look at the 10 year, you see now here, the tenure makes a lower low, see that we have a lower low formed in the 10 year, comparatively, with the
92 00:17:34,890 --> 00:17:44,760 five year that was unable to make a lower low. At the same time, the 30 year treasury bond was making a lower low. So we have that September, October time
93 00:17:44,760 --> 00:17:55,260 period going into November, and we have a very impressive rally. Again, we're gonna assume that we could have taken a long at 114. This is all hindsight. And
94 00:17:55,260 --> 00:18:14,070 this is completely hypothetical. But in the grand scheme of things that say it's 114, there's an entry that's 246-810-1214 1618 2022 2426 $28,000 per contract,
95 00:18:14,610 --> 00:18:28,140 going long on the 30 year treasury bond with a seasonal tendency, and expecting higher prices and using the index s&p divergence. Huge, huge huge moves in the
96 00:18:28,140 --> 00:18:41,070 bond market here. What I want you to believe is that, yes, these moves are possible, but not all of them will be this extrapolated This is a huge, huge
97 00:18:41,070 --> 00:18:56,160 move. But the market had moved down into a discount array down here as well. Price moved away inside of breaking all the premium arrays, insider rallying for
98 00:18:56,160 --> 00:19:12,570 a higher timeframe objective. Now if we look at a higher timeframe chart, and we'll do that now. Here we can see that 114 level was inside of a bullish order
99 00:19:12,570 --> 00:19:23,640 block and also came down in took out short term sell stops. And this is a weekly chart prior to that extrapolated move on the upside. Here's the range the high
100 00:19:24,660 --> 00:19:38,310 and the low we had moved down into a discount array, ran stops, bullish order block. Boom, I suppose the price rally 1009 set up here. May June time period.
101 00:19:39,390 --> 00:19:55,050 You'd see the five year going into June Can you see a higher low forming here. So this old low here did not get broken with this low end on a tenure right away
102 00:19:55,050 --> 00:20:11,460 we can see made a lower low right there and The bond market made a lower low in our May June time period, we could be a buyer in the bond market. Again, we're
103 00:20:11,460 --> 00:20:16,290 going to be using that 14 level at 114 level as a potential entry.
104 00:20:18,210 --> 00:20:34,770 Return to the order block here last down close, the high on this is 113 21. And this low here came in at 113 22. So we're going to just say that it's 114 that
105 00:20:34,770 --> 00:20:51,420 we got in it, use a nice big round figure 114 in price rallies up to 12345678 and a half, or eight and a half $1,000 per contract. Now this is the September
106 00:20:51,420 --> 00:21:00,060 contract, we're going to look at how much it rolled if we moved into the December contract out of this out of the September contract and rolled into
107 00:21:00,060 --> 00:21:09,330 December delivery, to get more of a move. So we're going to reference basically the beginning of September in the contract, price movement in December's
108 00:21:09,330 --> 00:21:10,470 contract which we'll see now.
109 00:21:15,630 --> 00:21:35,340 Okay, that's September here, and price rallies another we'll say one, to 3000 and a half, three another $3,000 more of a price move by rolling from
110 00:21:35,340 --> 00:21:48,450 September's contract ended December you taking the greatest advantage of the seasonal tendency. Also notice that we have that September rally October
111 00:21:48,510 --> 00:22:02,700 November time period where we get that short term traders idea for buying the bonds in relationship to our seasonal tendency buying down in here and getting
112 00:22:02,700 --> 00:22:16,500 out here not even getting the highest high and the lowest low that 3000 4000 hours worth of price action here and here as well. So from assuming, got in at
113 00:22:16,980 --> 00:22:37,860 18 and a half each time 1000 2000 3000 4000 5000 1000 2000 3000 4000 5000 Nice moves each and each one of these wouldn't be considered megatrade but the again
114 00:22:37,860 --> 00:22:55,500 May June time period when we looked at your long that would be a megatrade. So the movement all up to 123 16 Based on the origin of the June low, and again,
115 00:22:55,740 --> 00:23:07,830 the five year failed to make a lower low 10 year and third year did go lower in June and ACEOS seasonal tendency unfolded beautifully in 2009. Okay, here we
116 00:23:07,830 --> 00:23:18,120 have the five year treasury note on September 2010. And our May June time period, we can see that the market has already started a trending environment.
117 00:23:22,590 --> 00:23:30,990 And in tenure, we can see the same thing occurring here, May June time period, we're going to take a look at that in greater detail intraday. And on the 30
118 00:23:30,990 --> 00:23:39,660 year treasury note, or Treasury bond rather, again, markets already in trending environment. So we're gonna do is we're gonna look at during this consolidation
119 00:23:39,660 --> 00:23:51,360 in here, okay, we're gonna look about mid May to mid June on an intraday basis. And we'll see the s&p divergence that was there. Okay, here we're looking at the
120 00:23:51,360 --> 00:24:06,720 five year and I zoomed in from May 12 2010, to June 15 2010. And you can do this by having the settings like this to line in today show about a month's worth of
121 00:24:06,720 --> 00:24:20,910 data to our chart and put the data field in which you want to scan through okay. And this is what you come up with by plotting that. And you can see that we have
122 00:24:21,960 --> 00:24:34,350 may going into June, we have this slightly higher low here. And then a 10 year we have that lower low. So right away have divergence five years failing to go
123 00:24:34,350 --> 00:24:50,280 lower like the 10 year and on a 30 year. We have that lower low as well. Okay. In a candlestick chart. You can see how that worked out in terms of
124 00:24:50,280 --> 00:25:02,850 institutional order flow. Fair value gap in here. Price trades down into it. There's your discount array. It's in a discount market. High to low. Why not
125 00:25:02,850 --> 00:25:09,930 down here, Michael, you could have used it, you could have use that that range. But we had a dynamic price movement here. And diamond dynamic price movement
126 00:25:09,930 --> 00:25:17,760 here as well. We have just recently taken this one out. So what's the next downside discount rate, it's going to be this one. In this is where the
127 00:25:17,760 --> 00:25:29,670 divergence occurred. So we're blending the two, lower low in the 30 year, but it goes to a discount array. At the same time, that 10 year makes that lower low,
128 00:25:29,700 --> 00:25:43,080 but the five year doesn't. So that's where your 2010 megatrade entry pattern formed. Let's go back out to the bond market. And we'll go to the daily
129 00:25:43,080 --> 00:25:59,640 timeframe. Okay, here's the daily timeframe for the September 2010 delivery contract. And we're gonna say at 122 and a half was our entry with a bond or
130 00:26:00,390 --> 00:26:04,560 interest rate s&p divergence. So at 122 and a half.
131 00:26:06,240 --> 00:26:27,330 Right in here, it's 1-234-567-8910 1112 13 $14,000 per contract. And that's just the movement up into prior to September. Again, we look for September October
132 00:26:27,330 --> 00:26:37,710 time period to give us our seasonal high or before the market starts going into a swing traders model, or short term trading. Let's look at the December
133 00:26:37,710 --> 00:26:49,590 contract of 2010. price dips down and it makes one more attempt to rally doesn't really trade higher than the previous high does it. But look what happens we
134 00:26:49,590 --> 00:27:00,420 have the October high, and the market eventually trades lower. So do the seasonal tendency and megatrade unfold there. Absolutely, it did. That's a lot
135 00:27:00,450 --> 00:27:15,930 of money. For one setup that you wait for every year and try to milk it to now we're gonna take a look at 2011. Okay, here's the September contract for five
136 00:27:15,930 --> 00:27:26,460 year Treasury notes 2011. And we're already in the intraday charts and we're gonna zoom out from this point on so see how the season tennis team can be
137 00:27:26,460 --> 00:27:35,100 sometimes a little bit late. And also want to show you a tendency to use relative strength a little bit differently. That way, you can see that it's not
138 00:27:35,100 --> 00:27:46,710 just looking at a short term low against another short term low, you can sometimes have to trade through a short term low to get the measurement. And
139 00:27:46,710 --> 00:27:58,170 I'll show you what that means right now. We have this low here, this low here and another lower low, you see that. So we have a low, a lower low and a lower
140 00:27:58,170 --> 00:28:10,890 low. So we have low lower low, lower low prior to the rally. That's in the five year. Now we look at the tenure, we have that same similar thing here. We have a
141 00:28:10,890 --> 00:28:22,560 low, a lower low and a lower low. Okay, so again, we have this same dynamic five year and 10 year on agreement. Now let's take a look at the 30 year we have a
142 00:28:22,560 --> 00:28:40,530 low, a lower low, a lower low again, no, we have a higher low. So by using three points of reference makes a swing low. We have a swing low here, here, here,
143 00:28:41,250 --> 00:28:54,720 lowest in the middle, higher, low to the left, higher, low to the right. Comparatively, we see that not occurring in the 10 year. And we don't see it
144 00:28:54,750 --> 00:29:06,960 occurring in the five year. Okay, so this is a footprint, it's the same Smart Money accumulation pattern by nature, or by description, the characteristic of
145 00:29:07,470 --> 00:29:19,680 seeing when Smart Money places their foot in the marketplace. But it's a different interpretation. But it's the same result. So while we can look at
146 00:29:19,680 --> 00:29:34,650 these two lows here, and here, that is enough to give a divergence. Okay? So between the five year making that lower low here the 10 year making that lower
147 00:29:34,650 --> 00:29:47,580 low here the higher low in the 30 year, it starts off by seeing and anticipating that low that lower low and as market starts dropping down we're gonna be
148 00:29:47,580 --> 00:29:58,620 watching to see it's a 10 year and a five year and a 30 year do it. We don't see it there. Okay, so the divergence occurred just a little bit late in terms of
149 00:29:58,620 --> 00:30:09,360 seasonal timing. But the anticipation is still there, and we start scanning for each day. Okay, now we're gonna go out in all these timeframes back out to a
150 00:30:09,360 --> 00:30:27,600 daily, and we can see that the signal itself formed on jauh, July 8 2011. Okay, so we can see. Okay, now we can see the 30 year treasury bond. And this is the
151 00:30:27,600 --> 00:30:43,410 eighth of July in 2011. Near the low end of the of this range, I'm sorry, this low here, stops have been taken the ranges from here to here, we're still in the
152 00:30:43,410 --> 00:30:54,720 discount. Price trade down into or block here, rallies away, we're going to assume that for hindsight, and hypothetical speaking,
153 00:30:55,829 --> 00:31:13,229 we got in at 124. So that would be 246-810-1214 1618 $19,000 per contract of price movement using the September delivery. And we're gonna go to that, let me
154 00:31:13,229 --> 00:31:26,549 show you really quick what the tenure looks like at the same time. Okay, nothing standing out obvious there. And there as well for the five year but for the
155 00:31:28,709 --> 00:31:43,859 December contract, if we roll over, when September expires, the movement from September on we can see price moves a little bit and then creates a short term
156 00:31:46,919 --> 00:31:58,679 decline into a September October retracement, then another rally up going into November. So the mark goes into a short term traders characteristic again as
157 00:31:58,679 --> 00:32:08,039 outlined the beginning of this teaching. So the September October time period, we're still looking for that seasonal high each year 2011 Does it again. Now
158 00:32:08,039 --> 00:32:25,259 we're gonna take a look at the 2012. Now we have 2012. opportunity here, May June time period. It's the five year treasury note. We have a lower low here, on
159 00:32:25,259 --> 00:32:39,599 the five year going in to June, from May to June. Tenure, we don't see that we see a higher low in the bond market, we see a higher low as well. So by itself,
160 00:32:39,599 --> 00:32:57,719 we won't need to go down to a lower timeframe, we'll just say we went in at 148. So 148 to 149 is 1000 2000 3000 4000 5000. So buying in here, up to here, we
161 00:32:57,719 --> 00:33:07,499 have about $5,000 worth of price movement. But notice what happens, price doesn't do very much of a move beyond this premium array. So we traded above an
162 00:33:07,499 --> 00:33:16,949 old high, but then it failed and turtle swooped in and went lower. So it didn't pay out a whole lot. Even if we go to the December contract, you can see that in
163 00:33:16,949 --> 00:33:32,069 2012. The bond market did not give us a nice extrapolated move, it only moved about $5,000 per contract and then went lower. Okay, and then went into a range
164 00:33:32,069 --> 00:33:42,089 bound consolidation, still giving us an opportunity to rally in September in October to catch those short term swings. But we didn't see that continuation of
165 00:33:42,089 --> 00:33:53,249 that theme of major things low into higher September October time period. It was actually a lower September October time period. But still, each year, we're
166 00:33:53,249 --> 00:34:03,389 seeing that September October time period for a rally seasonally and they're trading off of discount arrays. But this month, or this year rather 2012 We
167 00:34:03,389 --> 00:34:14,309 don't see the evidence or the painting out of that megatrade now this is the first one in the years that we've started looking at but so far, it's been
168 00:34:14,309 --> 00:34:26,249 pretty consistent. And so now we're gonna take a look at 2013 Okay, now we're looking at the 2013 is a five year treasury note. And we're looking at May June
169 00:34:26,249 --> 00:34:33,239 time period. So we have a low here. Maybe this seasonal tendency is coming in a little late. We have a lower low going into July just like the previous year we
170 00:34:33,239 --> 00:34:46,229 saw a little bit of lateness coming in the 10 year we see that same lower low form. And in the 30 year, the same lower low bonds are on a downtrend and guess
171 00:34:46,229 --> 00:34:58,889 what, there's absolutely zero megatrade forming for this for our seasonal tendency. So we have back the back years 2012 2013 not providing our bullish
172 00:34:58,889 --> 00:35:11,969 seasonal tendency For a rally, and we don't see that seasonal pop from May, June leading into October, September October time period as a seasonal high. Let's
173 00:35:11,969 --> 00:35:22,919 take a look at what the September contract look like. Here, in contrast to the December contract, you can see that the September and October time period did
174 00:35:22,919 --> 00:35:37,649 create our buying opportunities that we look for. But the megatrade was simply not there. About 9000 8000 hours of a price move on this, but we're just gonna
175 00:35:37,649 --> 00:35:43,649 say that 2012 and 2013, or dud years. So now we'll take a look at 2014.
176 00:35:45,600 --> 00:35:55,980 Okay, here we have 2014 Is the five year treasury note. And here's our May June time period. Okay, and we have a low, a lower low, then we have the market
177 00:35:55,980 --> 00:36:08,280 creating a little bit of a rally up and tenure, we can see that we made relatively equal lows in the middle of June, let's go back to the five year, you
178 00:36:08,280 --> 00:36:22,890 can see that we went lower here failed to go lower in the tenure in the 30 year, failed to go lower. So we have a divergence there. But notice we have a nice
179 00:36:22,920 --> 00:36:33,480 wick down taking out these equal lows in July, they did a stop run. Now I mentioned before how bonds typically are not plagued with a great deal of
180 00:36:33,480 --> 00:36:42,870 manipulation. But this is one of those instances where it does occur. But it creates another SMT divergence between the interest rates. So the 30 year, makes
181 00:36:42,870 --> 00:36:58,650 a lower low here in July, does not make that lower low in July in the tenure and doesn't create that lower low in too late end of July here. But all we need is a
182 00:36:58,650 --> 00:37:09,240 signal for the bond market, the 30 year treasury. And that's in here. So we can see this as a run on sell stops. And we'll say that we were able to get in at
183 00:37:09,240 --> 00:37:35,910 135. So that would be 123456, almost seven 1000 hours worth of a price move. And that's using the September contract. And December contract sees it go even
184 00:37:35,910 --> 00:37:45,270 further. Okay, we have a nice run up in October. So we have our September, and then our October November rally as well. So again, we had to back to back dead
185 00:37:45,270 --> 00:37:57,480 years, then came right back in with a barn burned a year of big big movement in the bond market. So now we'll take a look at the 2015 year. Okay, we have 2015
186 00:37:57,480 --> 00:38:08,130 This is the five year treasury note or May June time period in here. Okay, and we have a low, the higher low and a higher low in here. But look closely, we
187 00:38:08,130 --> 00:38:25,710 have a higher low here towards the end of June. On a 10 year, we have that lower low. So right away, we have s&p divergence, and we have a lower low and creates
188 00:38:25,710 --> 00:38:35,010 a lower low for the month in the 30. Year. Okay, and price starts to rally from there, we're gonna say that we were able to get in at 149. Again, we're not
189 00:38:35,010 --> 00:38:55,470 trying to pick the best price of entry. So 149 to 152 345 678-910-1112 13 $14,000. Again, a price rally, but it creates a short
190 00:38:55,470 --> 00:39:06,120 term high in August, feeding back to a premium or a bearish order block then falls off rather aggressively. Okay, so we we rebounce all price delivery on the
191 00:39:06,120 --> 00:39:16,230 downside here with buyside delivery here. Let's see what the December contract shown if there was any more continuation but right away, it's already a mega
192 00:39:16,230 --> 00:39:29,070 trade by itself in terms of price magnitude, how much it moved. And for the December contract, it created again the September, October November rallies, but
193 00:39:29,100 --> 00:39:38,430 nothing in terms of extrapolation on the upside. So again, we have another year where the megatrade unfolds for the bond market. Now we're gonna take a look at
194 00:39:38,430 --> 00:39:49,710 2016 Okay, can see the 2016 five year treasury note for the September delivery contract. Okay, or May June time period here we have a lower low and a series of
195 00:39:49,710 --> 00:40:01,170 lower lows in here going into June. We have a higher low at the end of May going into June and we have the failure to make a low We're low, even in this series
196 00:40:01,170 --> 00:40:12,360 of lows. So right away, we have s&p divergence. And we have a higher low constantly with bond markets. So we're gonna say we had a 163 entry, and not
197 00:40:12,360 --> 00:40:30,630 picking the lowest or best scenario 163 1-234-567-8910 1112 13 $14,000. Again, every full handle is $1,000 per contract. And that in itself is a nice
198 00:40:30,660 --> 00:40:40,140 megatrade, big, huge extrapolated move. And again, it dies out in July and goes lower. Let's see what happens in December.
199 00:40:42,390 --> 00:40:54,150 Was there any follow through in December 2016 is contract. So we've made the high in July, and then went lower, and nothing shown as a rally for September,
200 00:40:54,420 --> 00:41:03,840 October November time period. In fact, it was in bear country. So it still panned out for 2016 in terms of megatrade payout, but this doesn't have that
201 00:41:04,290 --> 00:41:15,330 September, October, length of time for a higher high. Then we're gonna take a look at 2017. Okay, we're in 2017, we're looking at a five year treasury note.
202 00:41:15,810 --> 00:41:24,720 And this is September delivery contract. And I want to take a look at the low here in April. Okay, I know we're looking at May June time period. But I want
203 00:41:24,720 --> 00:41:38,460 you to look at this here, this low, and a higher low formed in May. And then it rallies up as to five five year treasury note. We have a higher low formed here
204 00:41:39,180 --> 00:41:53,670 on the 10 year. But look, what we have here, we have a lower low on the bond market, to the 30 year treasury note, or Treasury bond has a lower low. So the
205 00:41:53,670 --> 00:42:01,830 s&p divergences there, the five year and 10 year showed a willingness to not go lower during our seasonal time period, May June time period. So we're going to
206 00:42:01,830 --> 00:42:16,110 say we got it at 150 to 150 is our entry. So 1000 2000 3000 4000 567 1000 hours worth of price movement. And we have yet to see, obviously the rest of this
207 00:42:16,110 --> 00:42:26,760 year, but 7000 hours payout, I wouldn't exactly call that a mega trade, but nothing wrong with it. And seasonal tendencies still implying further prices.
208 00:42:26,760 --> 00:42:34,830 And we'll see if the bond market has a willingness to go higher, and trade back through the 157 level. And we'll see the rest of the year if it pans out. I
209 00:42:34,830 --> 00:42:43,890 don't believe I have a crystal ball to tell you if it's going to do it here or not. But it's one to watch for the rest of the year. I'll let you determine
210 00:42:43,890 --> 00:42:51,660 whether $7,000 per contract is a megatrade. Personally, I don't believe it is I like to see excessive for the bomber, I have to see about 10,000 hours or more
211 00:42:52,590 --> 00:43:01,290 to basically qualify as a megatrade. Is it a matter of importance? If you make 7000 hours versus 14,000 hours, obviously, everyone would raise your hand say I
212 00:43:01,290 --> 00:43:10,050 want to $14,000 But I'd like to see 10,000 hours or more for the annual move that takes place in the bond market to really qualify as a megatrade. Anything
213 00:43:10,050 --> 00:43:19,800 less than that is this a really good trade, but not to make a trade. So hopefully you found this teaching insightful. It gives you the basis for finding
214 00:43:19,800 --> 00:43:27,240 the big move that takes place in the bond market. Don't stop here, go back and look at earlier years to NIS, again, all you're doing is changing all the
215 00:43:27,240 --> 00:43:40,410 information down here. Okay, and using the intraday chart showing one month's worth of data and just pick a time between when the low makes its formation. And
216 00:43:40,410 --> 00:43:47,580 you'll see the divergences is always there. It's never missing. And you can clearly see the footprint at Smart Money lease when they go in and buying
217 00:43:47,670 --> 00:43:56,310 aggressively and the magnitude of their orders causes that diversion to occur across the yields of five year 10 year and 30 year and until next time, I wish
218 00:43:56,310 --> 00:43:57,630 you good luck and good trading