The Rooster Call: Trading the Technical Analysis Signals

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

Volatility remains strong as cross-currents hit currencies and equity index futures this morning.  Euro started falling on the heels of a report  showing German industrial production plunged 4 percent in August, more than the 1.5 percent reduction predicted by economists and the biggest decline since 2009 (Bloomberg). Price settled around 6AM ET testing 1.2610-12590 area in VERY slow trade.  Be careful chasing in a slow market. This news from Germany will stoke fears of recession.

European equity index futures including FTSE 100 fell overnight and ES moved in sympathy.  Opening bias is bearish on ES based on yesterday’s daily chart price action.  Totally up to USA traders to reverse the negative tide.

Yen is lower off overnight highs.  Officials who are working night and day for a lower Yen made public statements they are not in favor of a weaker Yen because this causes imports, especially energy prices paid by consumers to rise.  These are requisite comments from politicians who say one thing and do another. The Prime Minister had to say this in order to save face with the electorate by expressing concern.  The Bank of Japan leader is basically saying, “trust me, this will all work out fine…just you wait and see!” 

We have to remember Japan is an export-oriented country.  Here’s the priority: Get your factories humming and the jobs will come is the policy in Japan.  Greater job growth and disposable income means inflation, which is the end goal. Any negative effects on the road to end goal is simply acceptable collateral damage. 

We were knocked out of our soybean trade capturing $5725 in profits. Recall we first entered on August 25 and added on September 23. Yesterday’s rise in soybeans and several other products based on US dollar drop more than anything else. The fall in US dollar yesterday was the largest one day drop in over 12 months. We knew this action could possibly occur. Today, the US dollar is stronger.  Nervous crew those currency traders.

War Department
Islamic State advances against the Kurds in Syria, whilst Turkey dallies and the rest of the coalition against Islamic State look more like they have joined the party for appearance sake rather than real results.

I am reading a fascinating book called “Lawrence IN Arabia,” by Scott Anderson. If you are interested in the history of this region from the first world war era, I suggest you pick up a copy from your local library. The parallels with today’s headlines are illuminating.

Russia economy getting worse so their central bank plows reserves into the system attempting a halt in the Ruble drop.

Today’s Reports and FED Activity

7:45 ICSC Retail Store Sales
8:30 Gallup US ECI
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $27B, 3-Year Note Auction
3:00 PM Consumer Credit

Overnight / Pre-Market

 

  • Not much to add here.  Equity index futures lower. 
  • US dollar incrementally higher.
  • Bonds incrementally higher.
  • Euro trading tight range after falling.
  • Natural gas lower.
  • Crude flat slightly lower and looking lower.
  • Metals very quiet after a pop yesterday.
  • Copper reverses.
  • Grains incrementally lower.
  • Yen incrementally higher helps Aussie.
  • Sugar, coffee, cocoa, cotton all quiet.

Think About This!

Turn around Tuesday in equity index futures?  We have a report at 10AM that might help.  Otherwise, the technical action looks bearish.  Just because Euro fell, does not by extension mean a continued drop.  Trade the technical analysis signals if day trading.  Recognize a tight range and be careful.

Have a great trading day!

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