Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day
Good Morning Traders!
Somewhat quiet overnight in trading. US dollar is higher tossing Euro lower. Euro is likely a good candidate for day trading. If US dollar moves, we expect moves could occur in gold. We have crude higher off lows, another candidate for day trading. A lot of instruments are very quiet.
US dollar, we are told by the financial press, is higher in anticipation of continued low USA initial claims report released today at 8:30AM ET. Low volume quiet markets find all economic reports under the spotlight as traders seek out any reason they possibly can for moving a market. Remember, the big hitters are likely on vacation telling junior clerks "don’t touch anything until I get back." This is August.
Markets in Japan closed for holiday and most likely Friday shall see low Japanese participation as traders take the day off.
I think the major work today is up to USA crude traders who must defend falling crude. This is a tough job, yet deep pocket traders know they can move the market. This time of year it is the more experienced large crude traders trying to out-smart the newer professional crude traders in a game of "who’s left holding the bag."
Back in the Spring, I suggested the IEA’s opinion of increasing oil demand was simply guess-work and part of the machine designed to pump crude prices higher. With this in mind, I am not surprised to hear the International Energy Agency on Thursday slashed its forecast for global oil demand growth next year amid a dimmer economic outlook and warned that the "massive" stock overhang is keeping a lid on crude oil prices. Here’s my forecast: When Spring 2017 rolls around, IEA will ONCE AGAIN forecast higher demand 2017 balance of the year and beyond because THIS IS WHAT THEY DO AS REGULAR AS CLOCK WORK.
Singapore lowered economic forecast. The importance of this "fundamental" news lies in knowing Singapore is in the heart of Asian trade. At any given time 300 ships are waiting to load and unload here. Singapore also has refinery, manufacturing, and warehouse presence. We note the economic activity down grade as we connect the dots.
Tonight at 10PM ET, China releases Industrial Production numbers, which will have a direct bearing on copper and Australian dollar. Chinese Retail Sales also reported.
On Friday, Germany releases preliminary 2nd quarter GDP numbers. The German Economy Ministry is "pre-selling" the idea the numbers shall be soft according to Reuters. This information might be weighing Euro lower overnight.
Jobless Claims 8:30 AM ET
Import and Export Prices 8:30 AM ET
Bloomberg Consumer Comfort Index 9:45 AM ET
EIA Natural Gas Report 10:30 AM ET
3-Month Bill Announcement 11:00 AM ET
6-Month Bill Announcement 11:00 AM ET
52-Week Bill Announcement 11:00 AM ET
5-Yr TIPS Announcement 11:00 AM ET
30-Yr Bond Auction 1:00 PM ET
Fed Balance Sheet 4:30 PM ET
Money Supply 4:30 PM ET
USA equity index futures remain side-way. For ES, let’s add resistance level of 2179 as a benchmark line. Dropping from here assures 2169 (like we saw yesterday) as support. Breaking through 2169 we expect 2159. Nothing special at all…just extremely slow grind. We are simply side-way at a higher level and this could play out for the rest of the year with pops testing 2200. Breaking our support/resistance levels serves as a chart event.
DAX, STOXX 50 price levels are higher thanks to lower Euro. Nikkei 225 higher thanks to lower Yen.
VIX woke up yesterday…at least one eye.
Considering the decline in Natural gas this week, today’s Natural Gas report could cause this market to continue lower or abruptly pop. If you trade Natural Gas, just be aware.
Crude tries to rally. As a general rule, we look for a move in the 7AM, 9AM, and 2PM ET hour.
Gold and Silver incremental…nothing special…watching US dollar. Copper attempts a rise as 215 holds in front of Chinese Industrial Production report.
Grains are quiet trading extremely tight…dangerously tight range.
Coffee decoupled from Brazilian Real moving lower as Real moves higher yesterday. Sugar and Cocoa dangerous.
Bonds incrementally lower…nothing special at all. As a general rule of thumb, the lower the Initial Claims report, the tendency for bonds to fall in price. Bond traders will trade this 8:30AM ET report and then bonds will switch reaction to USA equity index futures trading at 9:30AM ET.
All currencies we follow are lower against US dollar in the green today.
Think About This!
I think swing traders should recognize current market conditions as a tide stuck between rising and lowering. This will pass. Hey, it’s August! We get this quiet action every year!
To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.