The S&P 500 futures (ESZ19:CME) closed at 3046.77 Wednesday, a record high, seven points above its opening print of 3039.74, and towards the higher end of its broadened trading range (3025.96 – 3050.10).
Above all, the Federal Reserve future interest rate reductions to bed, unless the economy shows signs of recession. Speaking of that, if inflation rears its ugly head they could possibly take rates back up. The Fed is actually acting under the pretense upon which it was created years ago. That is a good thing; one that allows predictability to gain a foothold instead of rampant speculation.
Apple didn’t disappoint either giving a “thumb’s up” to the premise that beating earnings will be rewarded. The Dollar, after spiking post Fed, saying “that’s it,” reversed course through the end of the trading day and into the after hours. It is all in place, per what we have spoken about before; rebuild the manufacturing side of the economy then get the Dollar to tumble and there is nothing that will hold back increases in GDP and corporate profits. It is not all that complicated. There is no reason to continue to buy the Dollar; let’s see who’s next worldwide to jump on board. Our guess is that the EU will follow suit giving a needed boost to the Euro.
10-Year Notes Tell All
Interest rate volatility should come to a standstill between now and the end of the year if not further into the first quarter of 2020. This last year has been fun; after touching above 3.00% then dropping down to below 1.50% traders received a gift. Time to look elsewhere for opportunities of this nature. It is not going to be easy to pick “what’s next”. We’re not going to be doing much over the next couple weeks as we move from Canada to Texas (damn it was cold down here in Texas today) but there are a few candidates on our radar. Again, too soon to talk about it but when we are ready you will know it.
Natural Gas Update
Canada did bring a few degrees of chill to the United States this week. Haven’t heard that this is going to be the worst and coldest winter on record but sense that with winter approaching buying on dips will be more prevalent than not. Remember, there is still more natural gas in the ground than anyone can use and the hopes of LNG changing the balance of that equation remains years away. Don’t be fooled by dramatic changes in “cash” prices that are often created by short term problems in the transmission of natural gas or problems due to short term, unexpected changes in the weather. In short, the “widow maker” can react in strange ways. Be prepared if you choose to continue to trade it.
Again, me and my cat hit the road next week. He wanted to fly but “have car will travel” rules the next week or so of my life. We’re scheduling the trip so that we can stay on top of what transpires but there is a chance we’ll miss a day or too; we apologize in advance. Keep emailing me at firstname.lastname@example.org and let me know what you want to hear about. Thanks for reading what we post; best for a great Halloween and don’t get “spooked” . . . the worst thing any trader can do is to get “scared” out of a position. If that is happening to you take a couple days off and reset your strategy. We do it all the time.
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.