Rooster Call - February 11, 2016
Martin Rimes
![Martin Rimes]()
Martin Rimes
CEO Hit the Mark Trading, LLC / Active Trader! Additionally, Proven Sales, Marketing, Business Development Professional
Rooster Call - February 11, 2016
Hit the Mark Trading's Brief Review of Overnight Market Action Setting the Tone for the Trading Day
Good Morning Traders!
Well, you are waking up to a serious problem with the ES this morning as highlighted in last weekend's Trader Weekly Review. 1804/1800 must hold or it's curtains for equity index futures. ES hit a low of 1802.50. VIX futures reviewed in last night's client video newsletter show price in the danger zone. Bonds continue the relentless climb higher as we have charted together.
Equity index futures are on the precipice of a major melt down. Up to USA traders to halt and reverse the overnight action. We have maintained the position sell all rallies based on our simple yet effective chart work.
ES futures -2.17%
Dow futures -2.09%
NQ futures -2.47%
Let's turn our attention to Sweden's Riksbank central bank action expanding negative interest rates to -0.5%. The krona currency was knocked down 1.6% against the Euro. The Yen exploded higher against the US dollar...big time! MAJOR CHART EVENT WITH YEN. European stock markets sold off on the news. Since DAX influences ES while USA traders sleep, ES fell.
It was the Brazilian finance minister, who coined the term "currency wars." We are in the midst of a race to the bottom by central banks throwing discipline and caution to the wind. No wonder gold finds a reason to SURGE. That 1253 line, discussed earlier this week in Rooster Call and the nightly video service is target. As I write, gold trades at 1235, up over $35.00. How's that for a pop?
Central banks. It's all about central banks.
Yesterday FED Chair Yellen disappointed traders with an ambivalence toward supporting the stock market. Traders don't want a "wait and see" approach. Traders want a fix because they are trained to expect a FED fix.
Yellen acts as if she wants to wean a child off a pacifier. The child does not like it. The market is trying to force her hand pricing in a USA recession.
Crude has a hand in the overnight drop hitting our target zone today with a low of $26.22 and could fall further to hit our line at $25.96. The drop we have witnessed in crude is an extremely valuable lesson reinforcing our mantra..."anything can happen."
We witness record USA crude inventories. Prepare for possible backwardation in the futures as a distinct potential. IF we see this...my goodness, here comes $20 crude.
US Crude futures fell -4.0% overnight.
The confusing instrument is Euro benefiting from the belief the FED will not raise interest rates as the very fundamentals of Euro zone worsen and the ECB stands ready to debase the currency in March!
Blame this Euro rise on seasonality which told us to expect a rising Euro and falling US dollar. I swear, there must be very large hands trading off the calendar. The run up in gold also predicted by seasonality.
Seasonality begets the momentum and price moves in accordance with repeating tendency we see year after year more often than not.
What instruments are not following seasonal tendency this year?
Bonds and equity index futures. Nothing is 100% of course including seasonal studies. In case you are wondering, the constant correct voice on rising bonds for years has been Jeffrey Grundlach, of Doubleline Capital. When he talks, you sit up and listen. He is one of the few voices against the Wall Street/financial media "buy stocks" propaganda machine.
FED Chair Yellen speaks to the Senate Banking Committee today starting at 10AM ET.
Remember we have a USA trading holiday on Monday.
Economic Events
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Yellen delivers semi-annual monetary policy testimony
10:30 EIA Natural Gas Inventory
1:00 PM Results of $15B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Markets
- Equity index futures dramatically lower, yet fortunately in recovery mode. Up to USA traders to keep the reversal alive. Be careful today. VIX futures "fear index" rising well into the danger zone. Yellen is not expected to say anything new...but she has the power to soothe the market so anything can happen.
- Equity index futures - day trading instrument.
- Bonds soar! Safe harbor run - day trading instrument.
- Gold and Silver pop in uncertainty. Gold attracted to 1253 and Silver tags along for the ride - day trading instrument.
- Crude new contract low looking lower - day trading instrument.
- Natural gas...Monday, the gap was discussed and we find the gap filled as is typical.
- Copper chugs lower. All about China here and lower industrial production globally.
- Grains are about the most boring show on earth. Wheat digs out from re-testing multi-year lows.
- Softs are quite.
- US dollar falls further forcing Euro higher. Let's be on the look out for a Euro drop down the road positioning in front of the ECB March meeting using options on FXE. The trade is sell 2016 call spreads and buy LEAP put spreads as an idea.
- Euro - day trading instrument.
- Pound looking lower testing lower support of side-way action.
- Canadian dollar finds it tough to rise against US dollar as crude craters.
- Aussie dollar dysfunctional. Avoid at all costs until a semblance of trend emerges.