The Rooster Call: FOMC Minutes Give Insight in Market Movement

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

Yesterday the FED released FOMC meeting minutes. The ES first dipped as initial reaction, then moved higher. After the dust settled, the view of the minutes was judged “hawkish,” which means the FED was attempting to prepare everyone for an eventual rate rise reminding everyone the decision is more data-driven and FED rates could respond quickly.

Today, Kansas City FED President George (not a voting member of the FOMC) said “I think the economy is already showing signs (of improvement)….I don’t want us to be behind the curve in beginning to normalize interest rates.” (Investing.com citing CNBC).

So the FED is trying to show the market, yes, the FED has a stimulus brake system and is prepared to use it. At the moment the market ignores the message. Technically, you want to focus on the ability for the S&P 500 futures making new highs. Price is knocking on that door.

Today the Jackson Hole FED meeting starts. Yellen speaks on Friday. The entire world community of bankers, traders, economists, and institutional managers are watching for signs of potential policy change. Bulls are thinking Yellen will speak kindly toward stimulus.

Overnight news from China (world’s second largest economy), finds factory activity slowed to a three-month low in August. See numbers below…

This ripple effect will have direct bearing on copper pricing, which surged 2.87% yesterday following a report from Glencore forecasting strong demand for copper from China and the West (Investing.com).

Remember traders are normal people…not the superior intelligent beings many think of. When the self-serving Glencore news emerged it was an emotional response kicking copper higher. It’s one of those “they must know something” type reactions.

  • Chinese HSBC Manufacturing PMI drops to 50.3 in August from 51.7 in July.
  • Japan Manufacturing PMI rose to 52.4 from July’s 50.5 reading.
  • German PMI composite reading fell in August to 54.9 from July’s 55.7 reading.
  • French PMI composite rose from 49.4 to 50.
  • Euro zone PMI composite fell from 54.2 in July to 52.8 in August

A reading of 50 or higher signals economic expansion.

War Department

  • Libya restarted crude export shipments from it’s largest port. Negative for crude pricing.
  • Gaza war continues.
  • Ukraine allows Russian humanitarian convoy into Ukraine border zone.
  • No change in the Iraq civil war

US Jobless Claims – Consensus called for 300,000. Actual filings were 298,000. The 4-week moving average rose from 296,000 to 300,750 (Econoday.com). This looks like a “nothing special” report, but the financial media touts “continued claims at a seven-year low” (Reuters).

Today’s Reports and FED Activity

8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index Flash
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Overnight/Pre-Market

  • Equity index futures we cover are all higher except for TF, which is unusual.
  • Bonds incrementally lower.
  • Gold delivers the anticipated whack.
  • Crude lower. We are trading October crude.
  • Grains super quiet.
  • Softs are quiet. Congrats to those who entered the counter trend cotton trade we mapped out in the nightly video service. We are not looking for giant moves…just a normal price pull-back.
  • Sugar rebounds.
  • Coffee stale / consolidating
  • Cocoa side way.
  • US dollar incrementally lower after knee-jerk move higher.
  • Euro touches 1.3243.
  • Yen incrementally lower.
  • Pound incrementally lower.

Think About This!

Yesterday’s move higher accomplished on lower volume reinforcing the idea big money is not fully invested.

Have a great trading day!

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