The Rooster Call: Welcome, Yellen!

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

Good morning, traders! Well, I imagine it’s cake, cookies, ice cream and soft drinks served at today’s FOMC meeting as Bernanke parts company. Welcome Yellen.

Markets across the board could trade quietly…especially currencies going into the FOMC Wednesday policy statement released at 2PM ET. As for stocks and stock index futures it is a mixed bag. We are seeing an over-due stock pull-back against a strong longer term trend and momentum market. Suddenly, taking profits on fabulous gains has gotten popular. Additionally, the large sloths of the market…pension funds have recouped their losses from 2008 and, we are told, have switched back to conservative investing…buying bonds.

Speaking of buying bonds, this is what everyone is worried about with the FED. Will the FED continue pulling back on the monthly bond buying program? Consensus amongst prognosticators looks for a $10 billion per month taper. This means the FED would drop monthly purchases to a mere $65 billion per month.

This morning’s Durable Goods report will affect the bond market. Typically, the stronger the report, the more we see bonds fall. The difference this time is the current rush to safety supporting bonds. A strong report would cause the market to assume the FED would surely taper. Not meeting the consensus expectation is bond supportive.

One thing we have as a constant are low interest rates. The FED has gone overboard beating the drum low interest rates are here to stay. The FED will likely reiterate this in the face of emerging market currency sell-offs.

Natural Gas served up a classic “where did that come from” whack providing a text book price reversal bar yesterday. At this point the high of Monday is our resistance. Any attempt to test resulting in failure is big neon warning sign. Thursday we have the inventories supplies number, but professional traders will look at the next six months. What happens to natural gas after the cold departs? A chilling prospect for price.

We are watching Corn and Beans. You have instruction from the nightly videos.

Today is Tuesday…can we see a “turn around Tuesday” after the recent drop? Why not? Day traders in equity index futures should continue seeing good intra-day range during rush hour.

Today’s Reports and FED Activity

US Federal Open Market Committee Meeting Starts
08:30AM ET – Durable Goods Orders
09:00AM ET – Case-Schiller Home Price Index
10:00AM ET – Consumer Confidence
10:00AM ET – Richmond FED Manufacturing Index

Overnight/Pre-Market

  • AAPL was down as much as $44.00 in overnight trading thanks to earnings release. We have an earnings release trade seeing benefit. We should liquidate the PUT side and hold the CALL side in my opinion.
  • MA and GOOG windfall profits should be banked…at least partials…runners can capture potential new gains.
  • Euro incrementally lower.
  • Yen incrementally lower.
  • US dollar incrementally higher.
  • DAX, STOXX 50, FTSE 100 incrementally higher.
  • ES incrementally higher, We need to see a close over yesterday’s high as conviction setting up a return to 1810.
  • Soybeans – So quiet it is unsettling. We have downward bias based on a “perfect storm” of fundamentals.
  • Corn – Locked in side-way channel.
  • Brent is extremely quiet. We have downward chart bias especially on a move below yesterday’s low.
  • US crude incrementally higher.
  • Softs were anything but soft yesterday…cotton whacked downside out of the blue, whilst Cocoa exploded higher. Sugar broke the 15 barrier. Coffee in a slumber.

Day Trader Bench Marks

Intraday ES Floor Pivots – Using 24 hour electronic market hours 1800-1715 ET.

R3: 1812.25
R2: 1802
R1: 1787.25

Main floor pivot: 1777

S1: 1762.25
S2: 1752
S3: 1737.25

Intraday Euro Floor Pivot – Using 24 hour electronic market hours 1800-1700 ET.

R3: 1.3775
R2: 1.3746
R1: 1.3710

Main floor pivot: 1.3681

S1: 1.3645
S2: 1.3616
S3: 1.3580

Think About This…

Today, I present a free hour long webinar hosted by Mirus Futures and Trader Kingdom at 3:30 PM CT. Importantly, the information I discuss is freely available in major charting packages. If you are looking for a new way to trade, please join us. Here is the registration link: Register Here!

Tonight at 8PM ET, I start the Simplified Options Course. I am really looking forward to teaching this three day course designed to break through the morass of too much information. As visual chart readers, trading options should be a relaxed event. We are not market makers who rarely look at charts and rely on mathematics. We believe the charts tell us everything and trade accordingly. Here is the registration page: Register Here!

Have a great trading day!

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