The Rooster Call: April Home Sales & Memorial Day

Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day

Good morning, traders! Europeans are participating in European Union elections. The Financial Times reports anti-EU populist parties surging in opinion polls across the continent.

The main event this weekend is Ukraine’s presidential election on Sunday. Worry persists of violence during and after the voting polls open.

Overnight reports find German business sentiment touched the lowest reading of the year based on an Ifo survey of 7000 businesses. ING economist quote from the Financial Times article: “The absolute level of the Ifo index is still high and no reason to panic. However, today’s drop combined with the earlier drop in the ZEW index and the PMI manufacturing confirms our view of an upcoming slowing of the economy.”

Euro trades lower on the Ifo report. Since today is Friday, we look for a sell-off in the Euro during the last hour and a half of European trading. Nothing is 100%, but this is a “more often than not” condition.

Spanish bonds upgraded by Standard and Poor’s. This is a structural positive for the Euro zone.

Chinese Premier Li Keqiang states “China’s economy still faces “relatively big” downward pressures and timely policy fine-tuning is needed (Reuters).

Only 13 firms on the S&P 500 remain to report earnings. Yesterday HPQ announced lousy earnings and guidance. Sadly, in order to court Wall Street and in a sign the company has no clear path to recover…up to 16,000 employees may lose their jobs. We have an earnings release trade on HPQ that will pay off if the stock drops or rises more than usual. If the stock does nothing the trade loses.

Today the market will focus on new home sales for April. Consensus calls for 420,000 annualized rate of new home sales. Home sales in March were lower at 384,000 annualized rate (down 14.5%). A major market positive is meeting or exceeding the 420,000 number as evidence the winter polar vortex was an anomaly and home sales are back on track.

We can expect normal morning trading today and after lunch likely extremely quiet trading as professionals start their three day weekend. Any day trader working trades in very light volume markets are subject to having sharks eat your lunch. Plan on leaving your desk early today and enjoy the time off.

Today’s Reports and FED Activity

10:00AM ET – New Home Sales

Overnight/Pre-Market

  • Gold and silver lower continuing side way action. We will do something here in June.
  • Copper still practicing levitation. Avoid.
  • Corn and Soybeans incrementally higher. We have a profitable educational corn trade working.
  • Cotton continues lower. Our educational cotton trade called “in advance” is up $2,100.00 per contract. Last night we lowered protective stop in your video. Just the perfect trade set-up and follow-through.
  • Coffee incrementally higher.
  • Bonds incrementally higher.
  • US dollar incrementally higher.
  • Euro strongly lower.
  • Yen lower.
  • Pound lower.
  • Aussie dollar incrementally lower.
  • ES and other equity index futures we follow are incrementally higher.

Day Trader Bench Marks

Intraday ES Floor Pivots – Using 24 hour electronic market hours 1800-1715 ET.

R3: 1906.50
R2: 1900.25
R1: 1895.25

Main floor pivot: 1889

S1: 1884
S2: 1877.75
S3: 1872.75

Intraday Euro Floor Pivot – Using 24 hour electronic market hours 1800-1700 ET.

R3: 1.3723
R2: 1.3705
R1: 1.3680

Main floor pivot: 1.3662

S1: 1.3637
S2: 1.3619
S3: 1.3594

Think About This!

How will history judge the big banks and the lack of enforcement tolerated for so long by authorities? Today’s latest finds Barclay’s hit with a $44 million dollar fine for fixing the price of gold. This is a day after paying much larger fines for Libor manipulation (Financial Times & Reuters). Will this criminal behavior ever end with the big banks or are we simply peeling back layers and layers of illicit activity as if peeling an onion?

Having worked in Asia almost 5 years working China, Japan, and SE Asia, I think the Chinese are some of the smartest business folks with thousands of years of mercantile history. I thought about this when I read China will prepay $25 billion for a 30 year gas supply valued at more than $400 billion. Let me tell you one thing…if the buyers are pre-paying…they got one heck of a below market price deal in my opinion. In the USA we say something like “walk softly with a big stick.” In China they say, “walk softly with a big check book.”

Have a great trading day and a WONDERFUL relaxing 3-day weekend!

To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.