The Rooster Call: Is the ECB Causing the ES to drop?

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

Good Morning Traders!

I am always on the look out for mentioning something unusual, hopefully helpful.  This morning my internet was down. We were going to liquidate the Euro trade before the ECB announcement.  So let this be a reminder if you have DSL or broad band cable or satellite internet access…problems occur when you least expect. You need your broker numbers handy.  Since I use an internet telephone, the phone was also down…this means the cell phone was the only method for reaching the civilized world.

You should always keep your emergency numbers handy, including account number, account passwords, if any, and broker desk.  Make sure a live person is reachable after hours on the night desk too.  Recently, an experienced active trading client reminded me of the need to have your spouse, partner, or adult family member completely knowledgeable of how to liquidate your positions in the event you, the trader, should become incapacitated. Good advice.

So now that the internet is up and running, the charts show Euro price has not done much of anything. The ECB held interest rates without any changes.  Count Draghi will reveal how close policy-makers are to implementation of QE (Financial Times).
Profit on the Euro trade placed November 21 is $2,200.  Recall our 2014 Euro educational trade results…per contract:

  •  $8000 Sept 15
  •  $3000 Oct 2
  • -$1500 Oct 8 – Loss
  •  $3637  Nov 7
  •  $2200  Dec 4
  • $15,337 in educational trade “hands-on” virtual profits.

Obviously more than one contract could have been utilized as could position pyramiding. Also, please remember that past results do not guarantee future results.  Just because we achieved these virtual profits in educational trades does not mean we will continue to garner same type or amounts of profits in the future.  Trading involves risk and a trader can lose all or even more than their trading capital.

The reason I call trades “in advance” is for you to see trend and momentum techniques work as well as account management. My style may certainly differ from yours. We review active trades in the nightly video.

Separately, yesterday, I created a live TF futures trading video for paid clients so traders could see me working the methods we use in action “at the right edge of the chart.”

In overnight news, the Shanghai Stock Index soared 4.3% based on traders eager expectation the Chinese central bank will provide stimulus to overcome a slowing economy.  I am telling you, the worse the news it seems the more markets rally on the idea central banks come to the rescue.  We have the USA FED and Bernanke to thank for imprinting this new behavioral trading paradigm.

Yesterday afternoon at the gym, I saw the financial television circus pushing oil stocks hot and heavy. Their number one job remember…telling you about “opportunities.”  You see, they know…and we know…energy stocks are a major source of market support. If energy stocks don’t kick back in, we have a major source of structural support missing. 

I typically tell clients if XLE and the financials XLF sectors are rising, then this is good for expecting the S&P 500 to rise.  Don’t forget the mission of the financial experts paid to tell you how to think is to develop retail trader interest in an important sold-off sector. 

Thanks talking heads, but we will watch the charts on our own and make our own decisions.

Euro is rising. I am thankful we exited the trade as I discussed last night.  Thankful for the cell phone today too. Could be an interesting Euro trading day filled with danger so pay attention to executing according to your plan instead of your mind trying to apply logic.

ES is dropping.  Is this all about ECB? When markets open we could see a run back up before continuation of down trend in the first 15 minutes.  Just be aware. We should expect volatile action big time. When you know a market is extra volatile, this is all the more reason to stick with the trend in my opinion. STOXX Europe 600 down 1% on Draghi comments in press conference.

Today’s Reports and FED Activity
Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Gallup US Payroll to Population
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Overnight / Pre-Market

  • Equity index futures lower on Count Draghi and ECB. 
  • VIX incrementally higher.
  • Natural gas lower. Inventory report today.
  • Crude lower looking a better range than yesterday so far.
  • Gold and Silver nothing special.
  • Copper higher on Shanghai market lift.
  • Soybeans rising. Two factors…technical analysis action and projections Brazil new finance chief will get Brazil in order thus strengthening the currency.
  • Wheat lower.
  • Corn higher.
  • Cotton incrementally higher tests resistance.
  • Coffee is weak.
  • Cocoa stable in consolidation tight range.
  • Euro higher means US dollar lower.
  • Yen flat. Polls find Abe should win landslide election, which means the Bank of Japan wins support for trashing the Yen.
  • Bonds higher incrementally as stocks fall.

Think About This!
We have a full moon on Friday. Put a bone in your hair and beat the drum at midnight if your trading is not working.  Alternatively, consider Hit the Mark Trading’s Boot Camp video recordings.  To each his own, right?  You know what works best for you. Click here for more information.

Have a great trading day!

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