Hit the Mark Trading’s Brief Review of Overnight Market Action Setting the Tone for the Trading Day
Government by late night negotiations as the Senate takes the ball seeking an end to the USA government shut down. From what we know, the debt ceiling would rise if the House of Representatives agrees with the Senate plan. New debt ceiling negotiations would then start early February…incredible, but true…more drama ahead!
Just because the Senate might strike a deal the President may approve does not mean an end to the dance. The House must approve or everything moves back to square one with USA default back in focus. The House looks more and more like the Alamo at last stand…determined, yet unwilling to recognize the inevitable outcome…willing to make the ultimate sacrifice based on their strong beliefs.
Market emotions are running high for debt ceiling resolution lifting equity index futures and US dollar. The market predicts an end to the charade.
The latest Zew Report in Germany shows economic sentiment at the best level since April 2010, yet missed expectation. A component of the report covering the Euro zone found economic sentiment declined.
DAX hit a record high on the German news AND powered by perceived USA debt ceiling progress.
Gold hits 3 month low. Silver drops 2%. Money flows out of safe-haven as reality sets in the USA will not default and a return to low inflation stronger US dollar belief takes hold.
Japanese Bank Nomura issues a report suggesting the Chinese economic recovery cannot sustain itself citing the recovery as “fundamentally unhealthy.” Financial Times. Remember China is to copper as fish are to the sea. China consuming at least 40% of global copper production.
Today’s Reports and FED Activity
8:30AM ET – Empire State (New York) Manufacturing Survey
10:00 AM ET – FED Dudley Speaks
11:10AM ET – FED Williams Speaks
7:15 PM ET – FED Fisher Speaks
- ES incrementally higher. DAX and FTSE 100 higher, STOXX 50 incrementally higher.
- Euro Yen currency cross is lower and bears watching.
- Euro currency lower. Remember we expect a move in the 8:00 AM ET hour more often than not. As I write Euro has sell signal on daily chart.
- Yen lower incrementally.
- Brent crude lower.
- US Crude flat to incrementally lower. Fundamentals are catching up, but a debt ceiling agreement can pop crude in sympathy.
- Natural gas higher on cooler temperature concerns.
- Bonds incrementally higher.
- Gold and Silver lower on debt ceiling resolution talks.
- US Dollar higher with a buy signal on daily chart.
- December Corn incrementally higher perhaps on news a weather system will slow harvest a few days.
- November Soybeans incrementally lower.
Day Trader Bench Marks
Intraday ES Floor Pivots – Using 24 hour electronic market hours 1800-1715 ET.
Main floor pivot: 1698
Intraday Euro Floor Pivot – Using 24 hour electronic market hours 1800-1700 ET.
Main floor pivot: 1.3577
S3: 1.3497 – Price near this area as I write!
Think About This…
Today I will issue another Signals – Futures beta test to clients. Recall last week we had three trades. Two wins $1250 and $1K respectively and a loser around $450. All trades called in advance demonstrate the principles taught at Hit the Mark Trading. New equity option trade were issued in last night’s video.
Remember if the House does not agree with the Senate debt ceiling plan, this is a major market negative. Therefore, recognize the increased risk considering lighter positions than normal. Prudence dictates either smaller trades or sitting on the sidelines. The risk of a Black Swan event is remote, in my opinion unless the USA defaults.
Have a great trading day!
To learn more from Martin, visit HitTheMarkTrading.com to join his mailing list and receive blog updates.