futures trading newsletter

DeCarley Trading brokerage clients enjoy two newsletters written by futures broker, Carley Garner,  Both the DeCarley Perspective and the Financial Futures Report offer readers specific trading recommendations using option trading strategies (commodity option selling), long and short futures contracts, and option spreading techniques.  

  • the financial futures report

    The data is suggesting inflation remains an non-issue

    Yesterday's PPI was reported to be even softener than analysts expectations. The headline figure suggests that prices at the producer level have decreased by .5%, but even the core reading was -.3%, Today's CPI painted a similar picture; the headline was -.2% and the core was .2%. In a nutshell, these reports are telling the markets the Fed isn't forced to take action. They can continue to take their time with the timing of the first rate hike in over 9 years.

    A few months ago we had predicted that the Fed would probably wait until the December meeting to begin raising rates because at that time most people will be enjoying the holidays, rather than drooling over everything the Fed does. We still think that this is a rather high probability. However, the Fed Funds futures market has dwindled the odds of a December rate hike to about 25% (in other words, the market disagrees with us).

    The "market' doesn't value the odds of a hike above 50% until we get into the spring of 2016. This is a dramatic change in stance of that seen a few months ago in which the Fed Funds futures market was suggesting a 50% chance of a rate hike in the October or December meeting.

  • the financial futures report

    The market is pricing in a good payroll number as it reverses pessimism over North Korea

    Late Monday afternoon I was watching a business news station. The panel was discussing the implications of a North Korea missile being fired (they were still trying to confirm the rumor that it had occurred). There was talk of a limit down opening to the E-mini S&P (the news broke during the daily afternoon pause of trading). They were right about sharp selling on the open but the bearish tone was quickly forgotten by tax reform talk. Even a 500-year flood couldn't deter the fiscal policy bulls. By Thursday's close all of this week's bearish headlines had been forgotten.

  • the financial futures report

    Crude oil futures are driving the bus

    Unfortunately for anyone holding stocks in their retirement portfolio, or anybody playing the long side of the e-mini S&P in the future market, stocks aren't trading on their own fundamentals. The broad market is simply following crude oil lower, and occasionally temporarily higher.

    It is important to remember the last time crude oil traded near $30, the S&P 500 was near 1,100, and the world was concerned we would no longer have a functioning banking system. This time around, we are in a much different situation. Unless I'm missing something, it is far less dire (unless you are long commodities). Nevertheless, something has to come back into line. Either oil, and the other beaten down commodities need to make a move higher, or stocks need to move lower.

    In recent days we've been "blessed" with some rather bold analyst calls in the commodity space. Some large and relatively well respected banks and analysts are calling for oil to fall to 20s per barrel, and in one instance expectations are for $10 crude oil!!! Perhaps these prediction will be accurate, but we have serious doubts. It smells a little like the widespread analyst expectations for $200 crude oil in 2008 when $150 crude oil was considered "cheap".

  • the financial futures report

    It's been a confusing day for the financial futures markets

    Last week we heard several Federal Reserve Presidents tout their hawkish stance; they went as far as to say an April rate hike is on the table. However, the Fed Chair Janet Yellen, took the other side of that argument in her speech to the Economic Club of New York. She emphasized measured and gradual rate hikes were the "only" way to go. She reiterated, the pace will be so slow the process could take years. However, she also stipulated the decisions made in each FOMC meeting will be data dependent.

    It seem to us, market participants would be better served simply ignoring the chatter of Fed Presidents, and focusing solely on the Chairman. Doing so would certainly reduce some of the noise caused by overzealous speculators.

    Contrary to the Fed Chair's suggestion that the economy still needs to be nursed back to life, Pending home sales were up 3.5% in February and the Case-Shiller 20-city Index saw a 5.7% increase in January. Further, the March Consumer Confidence Index jumped to 96.2.

  • ZB and ES futures trading newsletter

    GDP surprises to the upside, but weak oil futures going into the weekend negates the benefits

    Stronger WTI crude oil futures trade overnight, and the flirting of an upside breakout, had the ES buyers in full bloom. However, the crude rally was rejected by technical resistance and later in the day suffered from a smaller than expected decline in operating rigs in the U.S. Accordingly, the U.S. equity indices failed to hold overnight gains.

    On a positive note, the second estimate of second quarter GDP was reported at 1%. Under normal circumstances, this would be a disappointment but in today's sluggish environment it could almost be categorized as a blockbuster report. To boot, personal spending and personal income ticked higher along with the final reading of Michigan Sentiment.

    This is the first time, in quite a while, we've seen a string of positive economic data. Until now, the trend has been for good news to be followed by bad. Now that data is firming up we have a hard time believing the S&P will revisit the low 1800s any time soon. Nevertheless, the last few trading days in February are normally weak, so we could see a few days of back and filling before heading higher.

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