The Rooster Call: Slow Growth Paves Way for ECB Stimulus

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

Eurozone GDP – Very Slow Growth Paves the Way for Greater ECB Stimulus

Overnight we have a report on third quarter Euro zone economic growth.  Pop the champagne for France, who’s economy grew for the first time this year in third quarter.  Germany narrowly avoided recession. Italy saw a drop of  -0.1%, while Spain and Greece showed growth (Financial Times). Reuters says the good news from France is due to increased inventories. Euro is unmoved by the data. DAX and STOXX 50 are lower.

If today is Friday, we have bias Euro will  drift lower into  European last hour and a half of trading.  This is a bias, not 100% absolute (nothing in trading is 100%).  So if you see a technical set-up calling for a short on Euro in your day trading…know we expect European traders are taking profits prior to leaving their trading desks…seems to be a pattern here standing the test of time more often than not

Lower Crude

Yesterday CL crude fell below our target of $75.00 we have reviewed in the nightly videos. Clients were prepared.  Today, IEA (International Energy Agency) said oil could go lower stating, “barring any new supply disruption, downward price pressure could build further in the first half of 2015.”  Full review of CL in the Trader Weekly Review this weekend. The next OPEC meeting is November 27.

Anyone watch copper yesterday after mention in Rooster Call? Copper had a nice intra-day drop. The metal is higher off yesterday’s lows this morning still reluctant of leaving the $3.00 area.  Dangerous.

War Department

The G20 meeting in Australia kicks off even as Russia sends more military hardware into Eastern Ukraine. Putin is one of the greatest sabre rattlers.  Russian naval ships are approaching Australia, Russian bombers are planning flights to the Gulf of Mexico area near the USA, and NATO intercepts a Russian military plane over the Baltics (Bloomberg). These actions are Putin’s way of saying, “don’t tell me what to do.”  Gold ignores the geopolitical heating up.

How does the world deal with a bully?  We are about to find out. Putin’s gamble is he can do what he likes as the rest of the world talks and postures with meaningless gestures.  In the event we see an unlikely conviction move out of the West against Putin, such as NATO entering Ukraine with troops and weapons, then we have a catalyst for lower equity index futures.  The audacity of Putin having a military flotilla moving toward Australia shows how the man thinks. 

Not sure what to do? Initiate cheap crash hedges with options to off-set long positions in stocks or equity index futures.

Today’s Reports and FED Activity

8:30 Retail Sales
8:30 Import/Export Prices
9:00 Fed’s Bullard: U.S. Economy and Monetary Policy
9:55 Reuters/UofM Consumer Sentiment
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:00 PM Stanley Fischer

Overnight / Pre-Market

  • Equity index futures we follow are flat.
  • VIX incrementally higher.
  • Crude flat after yesterday’s drop.
  • Natural gas higher with report on inventories later today.
  • Gold, silver, platinum, Palladium lower, yet copper higher.
  • Grains lower and we discussed Soybeans in the nightly video.
  • Coffee at decision test point we discussed.
  • Sugar lower as expected.
  • Bonds flat…incrementally lower.
  • US dollar incrementally higher.
  • Pound continues lower.
  • Yen lower.
  • Euro incrementally lower looking like a break could occur from tight side way range.
  • Finally Aussie looking lower as discussed in your nightly video.

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Have a great trading day! 

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