The Rooster Call: Big News Out of China

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

Good morning, traders! Big news out of China with industrial output climbing 10% in November year over year. Chinese retail sales up 13.7%. The Financial Times reports record Chinese imports of iron ore. We have a position in CLF as a long-term trade so if world iron ore pricing rises, CLF sees bottom line benefits. This news out of China is market positive. Copper up.

Here are Euro zone manufacturing numbers…

  • France reported industrial production weaker than consensus for the month -0.3%. Year over year industrial production down 0.9%.
  • Italy beats consensus month over month for industrial production rising 0.5% and year over year -0.5%.

Outside the Euro zone…Great Britain reports industrial production rose 0.4% month over month and 2.7% for the year. Swedish industrial production falls 5.0% year over year.

Europe as whole is mired in economic sluggishness. The Pound reflects the strength in UK economic reports. The Euro reflects strength in USA economic reports and hope for a better day to come. The Euro also climbs as the ECB’s balance sheet shrinks with banks paying off long-term loans.

Support to the USA oil industry comes from Washington granting 103 licenses to ship US crude oil abroad (Financial Times). USA crude trades higher this morning.

Brent crude experienced a large drop yesterday and is higher off yesterday’s close. This rise could be part of the Chinese industrial production report ripple. Since Brent is moving and US crude breaks four tight trading days, day traders should monitor for increased trading range today.

Separately, Reuters reports OPEC will slightly lower oil output for 2014. According to the news report…That suggests there will be virtually no surplus crude in the market in 2014 should OPEC keep output at November’s rate. The amount of excess oil has fallen from earlier this year when OPEC output was well above 30 million bpd.

Today US regulators will vote on the Volcker Rule, a regulation prohibiting banks from engaging in risky trades for their own account. Banks are lobbying against this rule because the money is just too big and they want a piece of it. Implementation would likely take place in 2015 according to a member of the CFTC.

Reuters reports Washington budget talks could produce a deal today.

If we see this, the market should consider this a major positive reducing uncertainty.

Today’s Reports and FED Activity

  • 10:00 AM ET – Wholesale Trade
  • 12:00 PM ET – USDA Supply and Demand Report

Overnight/Pre-Market

  • ES and USA equity index futures are flat to incrementally lower.
  • 1813 is a major line in the sand for ES futures.
  • DAX, STOXX 50, and FTSE100 index futures are flat to incrementally lower.
  • 30-Year bonds on third day of gains. We discussed Friday’s price bar a potential reversal.
  • US dollar incrementally lower.
  • Euro incrementally higher.
  • Yen incrementally higher.
  • All metals are higher…gold, silver, and copper.
  • The global news on wheat gets more bearish every day. Wheat lower.

Day Trader Bench Marks

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

R3: 1819
R2: 1815.25
R1: 1812.25

Main floor pivot: 1808.50

S1: 1805.50
S2: 1801.75
S3: 1798.75

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

R3: 1.3812
R2: 1.3780
R1: 1.3760

Main floor pivot: 1.3728

S1: 1.3708
S2: 1.3676
S3: 1.3656

Think About This…

It’s time you think about setting up your calendar for 2014!

Target has a perfectly good calendar you can use for recording trades for $15.00. You need the month at a glance feature and then a weekly section allowing you to write notes on each day. I use the “Weekly/Monthly Planner,” by Blue Sky.

Once you obtain your calendar you should enter important trading events such as option expiration, FED meeting / report dates, and USDA report dates if you are an agricultural commodity trader. You can also enter company earnings reports for those firms providing advanced notification. Don’t forget to enter the first Friday of the month USA Employment Situation Report day. These are little notes keeping you aware of potential market moving events. Enter anything you feel you need keep track of for your trading.

Consider these sign posts along the highway.

Have a great trading day!

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