Will The Fed Step In This Week?

Charts, Commentary, Natural Gas, News, Stocks, The Opening Print


The Want Is There, But Not The Need

The S&P 500 futures (ESZ19:CME) settled Monday’s session at an all-time high, 3036.25, slightly more than 13 points above its opening print of 3023.00, and towards the higher end of its trading range (3022.75 ­- 3042.75). While it looks like there is a ten point gap from Friday’s close, those who trade “overnight” realize that is not the case. 

Many technicians are calling for a 3 percent rally from here. Quite often when an index breaks through a “major level” (in this case 3000), the tendency is to run another 2 to 3 percent, so this is standard jargon.

Some analysts are calling for another ¼ point reduction from the Federal Reserve. Trading in the 10-year note does not reflect that, nor does the need, especially with the improving China trade news, but one never knows. If there is a reduction, it will be the last, unless weakness in the economy rears its ugly head and they’re forced to lower rates.

Impressive Movement This Year

It might be a good idea to take a look at the 52-week range in the $SPX. The market’s lowest print was 2346.58, catapulting almost 700 points to reach its highest print of 3044.08 yesterday.

In my book, that is a pretty big range. It’s not that we’re looking for a correction; we are not. In the same breath, we are not looking for the markets to run much higher over the near term either. We have been wrong before and perhaps the markets will run; it just doesn’t seem very likely, with all things considered. 

Feel free to email me at david@amstradinggroup.com if you have any questions, and above all keep reading; today’s commentary takes a look at the effect of politics in the markets, something I could stand on a soapbox and talk about forever.

“Imagine” by John Lennon – An Appropriate Title

Lennon wasn’t thinking about the U.S. Congress or the British Parliament when he wrote this beautiful song, but he very well could have been. Please pardon my “transposing” a few of the lyrics, but it helps me to tell my story.

Imagine there's no “congress”
It's easy if you try
No “votes surround” us
“It’s time to question why”
Imagine all the “politicians”
“Actually doing their job”
Imagine there's no “parties”
It isn't hard to do
Nothing to kill or die for
And no “division”, too
Imagine all the “representatives”
“Doing what they’ve said”
You may say that I'm a dreamer
But I'm not the only one
I hope someday “they’ll” join us
“And even get something done”

Last week I talked about why I like certain politicians. Whether I agree with their positions or not, it is more important that they govern consistently with what they said in their campaigns. It is the role of any governing body to act in the best interest of those who elected them. Above all, it is their responsibility to enforce the results of elections. Most of this falls on deaf ears.

In today’s world, at least in the United States and Great Britain, election results are not binding. In some instances, segments of the political landscape suggest those who voted were wrong, and it’s up to politicians to alter the outcome. With respect to Trump beating Clinton, the Democrats are still fighting the “will of the people.” The same is true in the UK. It’s been years since the population voted on Brexit; seems that the voters in both instances are entitled to obtain what they voted for. Unfortunately, this is not the case.

There is not enough room on this page for me to continue to rant and rave. It would be nice if Congress acted to legislate on immigration, health care, or even infrastructure (something every politician can relate to), but with a “house” divided, this is simply not going to happen. Maybe the 2020 election will bring about unity, or one party having control of the executive and legislative branches, so something gets done. Like Lennon said, imagine, but from where I sit, it’s only a dream.


Nat Gas Update

Wow, it is nice to be right. More so with respect to Natural Gas, it’s nice to have a fifteen cent move (almost 7 percent) the day after the position was taken. I’d rather be lucky than good, and the harder I work the luckier I get. Someone somewhere must have said it is going to be cold next weekend; someone is always saying this is going to be he coldest winter on record, though I haven’t heard that one yet this year, but I assure you it’s coming.

Personally, it is going to be a busy time for me over the coming weeks. After many wonderful years, essentially in retirement, I am returning to the United States from Vancouver Island. After my return we are going to do our best to “run live” so we can “teach” using an active AMS screen through TradeChat.

If something of this nature is of interest to you, please let me know.  At the same time, let me know what commodities you like to trade.  My partner Niels is the expert on the ES, but he can’t always interact while trading live from the Amsterdam Exchange.

Email me at david@amstrdinggroup.com and let me know. Thanks for reading what we post, and best for a great trading week.


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Danny Riley (3544 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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