The Rooster Call: Are the Charts Showing a Pull-Back Possibility?

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

Good morning, traders! Last night’s video had several classic Hit the Mark Trading trades in currencies discussed. The US dollar moves higher which we have expected. This week we see equity index futures shapes up exactly like last week…drop the market on Monday, turn the market higher the rest of the week. In the big picture S&P 500 futures remain locked in side way action. European equity index futures are breaking higher with conviction.

The financial press cites a preponderance of “experts” calling for a market pull back. We remain firmly long biased until our charts tell us differently. Eventually, yes, a pull back will occur. Meanwhile, trades we placed betting on the seasonal rise continue working positively for us. This is the fourth year placing the same trade using simple option techniques. The trade, believe it or not, is based more on crowd behavior than anything else.

Producer Price Index shows modest up tick matching expectations. For 12 months ending December the index measured 1.2% increase over previous year.

A report on German private consumption increased over last year is seen as a positive for DAX and STOXX 50.

Today we have the crude report, two FED speakers, and the 2:00PM ET release of the FED Beige book. We should expect the Beige book will have positive information on the USA economy as a support document for FED tapering of QE. Thus the release is expected market positive.

Today’s Reports and FED Activity

  • 08:30 AM ET – Producer Price Index
  • 08:30 AM ET – Empire State (New York) Manufacturing Survey
  • 10:30 AM ET – EIA Petroleum Status Report
  • 12:50 PM ET – FED Evans Speaks
  • 14:00 PM ET – FED Beige Book
  • 17:20 PM ET – FED Lockhart Speaks

Overnight/Pre-Market

  • Brent crude is testing a line in the sand incrementally higher, but not by much.
  • USA crude higher going into today’s crude inventories report.
  • Both Brent and NYMEX Crude draw strength from evidence USA and Euro zone consumers are proving resilient.
  • US dollar higher.
  • Euro lower, trade.
  • Australian dollar lower.
  • Yen lower, trade.
  • Bonds incrementally lower.
  • Soybeans kicked higher yesterday as January futures went off the board. This is a weather market based on South America.
  • March Corn looking lower.
  • Coffee consolidating.
  • Cotton remains side way.
  • Sugar incrementally lower.
  • Cocoa potential retest of recent highs.
  • Gold and silver nothing special as PPI shows inflation remains very low.
  • ES, NQ, and TF futures are higher in pre-market looking for retest of recent highs.
  • YM incrementally higher, but following ES.
  • Everything is in place for a nice move higher for USA indexes looking at Europe’s action.
  • DAX and STOXX 50 break through resistance.
  • FTSE 100 surges.

Day Trader Bench Marks

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

R3: 1862
R2: 1848
R1: 1840.50

Main floor pivot: 1826.50

S1: 1819
S2: 1805
S3: 1797.50

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

R3: 1.3755
R2: 1.3727
R1: 1.3704

Main floor pivot: 1.3676

S1: 1.3653
S2: 1.3625
S3: 1.3602

Think About This…

FED speeches this week have stressed the taper is here to stay. This is driving US dollar higher, in my opinion, more than anything else. USA traders continue accentuating the positive economic data points, whilst looking around seeing equities and equity index futures remain the only game in town…at this point in time.

Have a great trading day!

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