What We’re Watching
The S&P futures (ESZ19:CME) closed at 3020.25 Friday, almost 20 points above its opening print of 3003.22, and towards the higher end of its trading range (3000.00 – 3026.50). Holding the 3000 level on the intraday low side was almost as important as closing close to record highs, but an increase of the trading range after testing lows and highs is just as important.
The much awaited news of a “China” deal, along with a settlement of the General Motors strike, led what was considered a good day in the markets something, that all were expecting.
It is certainly good to look at a chart of the ES, but more so to see what news of this nature did to other related contracts. Feel free to email me at david@amstradinggroup.com if you have questions, and above all, keep reading; today’s commentary is priceless.
David Bowie’s “Changes” Rules Today’s Trading
Getting emails over the weekend tells us that people are reading what we write, and we want to say thank you to everyone who has taken the time to send us comments on the content we have chosen to provide. You reinforce prior topics we have chosen to discuss, in particular the interest rate futures and related contracts, which form the basis of what we spoke of earlier. There has been a major change in the macroeconomic landscape, which is why I titled today’s article consistent with David Bowie’s hit song, “Changes.”
Last week we discussed the actions of the Federal Reserve as they continue to flood the market with cash. We offered an analysis of what we call the “Faux” QE4, a then necessary action. The primary reason for the increased injection of money into the system was the deleterious effect trade wars were having on the markets. When countries trade less, there is less money in circulation. That all changed when the U.S. and China shook hands and smoked the peace pipe. Let’s start our discussion of change with the 10-Year Note futures.
For those of you who still think interest rates are going to be reduced, the picture has changed. Interest rates are more than likely done heading lower. The need for such action has been greatly reduced by the settlement of the trade war. The Federal Reserve stood tall with what we’ll call its ‘general actions’ to inflate the markets with money. That need has all but been extinguished.
Coffee
You may ask why we trade Coffee (KC 12-19), and that is a good question. When there is a reaction to the market related to China and the rest of the world, keep in mind that the most volatile currency as related to changes in the Yuan is the Brazilian Real. Coffee trades off the Real, so in essence, we are trading currency like contracts when we trade Coffee. Note the reaction Coffee had when the deal between the U.S. and China was made. Trade for 50+ years and you’ll gain the same experience we have.
Nat Gas
I’d rather be lucky than good, and the harder I work the luckier I get. It’s true for our entry into NG-F late in the day on Friday. We’ve been watching this contract for weeks looking for an entry. A major cold front is crossing the United States. It’s the first such instance, and Natural Gas usually reacts to it. We chose to enter with the February (NG 02-20) contract, but used the current November contract for technical analysis (NG 11-19). A word of warning, the contract gapped up, and as we all know, gaps get filled. It’s called the “widow maker” for a reason, and as such, is not the first commodity you should be trading.
Come Join AMS / MTS – Learn How We Trade
We wanted to give you a starting point of how we trade, but find it impossible to educate everyone at the same time using only a single column of text. This is, however, where we’re heading. Our email has been lighting up, so we need to determine how best to accomplish this task. Individually, no problem, we have many people like you asking us “how much” to teach how we trade. We’re interested in teaching the masses, so please tell us what you want to learn.
The other caveat to asking us to teach you how we trade is this; we cannot teach you how we trade. We can however teach you how to identify symbols and patterns (see Opening Print 10/23/19), so that you can identify patterns that you recognize.
Read: https://mrtopstep.com/symbols-and-patterns/
Email me; david@amstrdinggroup.com, and I will reply. Sure, we put together some great charts that we rely upon. Together with MTS, we care not that you just buy our charts, but that you learn how best to employ them for how you trade.
We’re close to figuring out how best to teach together with MTS. We’ll have more to offer once you take the time to tell us what you want. Please take the time to tell us, and like all who have, you’ll get a reply from me. If you’re like others who send me their telephone number, then you’ll probably get a call back.
P.S.
I’m moving to Texas from Vancouver Island, and hoping to be completely set up by November 11, so bear with me; it takes time to get this all right. Best to all for a great trading week.
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As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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