As most futures traders expected, the Federal Reserve didn't take action
Going into today's FOMC meeting conclusion, the Fed Funds futures markets were assigning a 15% probability of a rate hike. As it turns out, the majority of traders were correct in assuming the Fed would bypass the September meeting. In our view, we probably won't see any action until December but of course, the November meeting is still up in the air.
We recently took part in a survey conducted by FXStreet.com in which we found the results to be rather interesting. According to the survey, expectations of the rate hike campaign are rather meager. The consensus average of those polled is calling for the rate hike cycle to stop at about 1.5%. Some were even predicting the Fed would stop at .75% (only one more rate hike from the current level). Also interesting, almost 60% of those polled believe quantitative easing is a tool the Fed will continue to use in the mid-to-long term.
If you are interested in seeing the details of the survey, click here: (http://www.fxstreet.com/analysis/fxsurvey-dovish-fed-to-hike-interest-rates-in-december-qe-might-return-in-the-mid-term-201609201150)
Treasury Futures Market
The Treasury market is confused, and so are we
Both the 10-year note and the 30-year bond continue to hold support, leaving the technical landscape in the Treasury market positive. Additionally, the seasonal tendency for bonds and notes is to grind higher overall into the latter part of the year. Accordingly, we caution against getting overly bearish.
On the other hand, each rally has been met with selling and option expiration is right around the corner (Friday). It is relatively common for markets to make a move in the direction of the trend to put pressure on option traders (for instance, those short puts which has been a popular trade). Also, the overnight reaction to the BOJ was nearly erased by the time the US day session rolled around; traders might want to explore those lower levels again.
In a nutshell, signals are mixed at best. Yet, today's post-Fed trade suggests market momentum could be turning from neutral to bullish. We have to lean higher from here...big dips will likely be buying opportunities.
Treasury Futures Market Analysis
**Bond Futures Market Consensus:** We favor the upside on big dips, but those dips can be significant...be careful.
**Technical Support:** ZB : 164'17 and 160'27 ZN: 130'0, 129'14 and 128'23
**Technical Resistance:** ZB: 170, 171'26, 173'06, and 175'16 ZN: 131'03, 132'02, and 133'14
Stock Index Futures
The ES refuses to stay down
Despite rocky seasonals in August and September, as well as what has historically been a rough week for stocks following the September triple witch, the bull marches on. As much as I love seeing the market move higher regardless of the news or peripheral headwinds(because of the impact on my IRA), something doesn't feel right.
Healthy markets correct, and this market just can't seem to dip more than a few percentage points. That doesn't mean we can't rally from here, but it does mean the bulls will eventually pay the price for the "easy money" they've been enjoying.
In the short run, a break above 2160 is bullish and could bring us well above 2200 (2215 to 2230). If the rally fails at this price, we might finally see the sub-2100 price range (2070ish).
Stock Index Futures Market Ideas
**e-mini S&P Futures Market Consensus:**
Our best idea would be to get temporarily bullish with swing trades should the ES fall into the 2070 area, or bearish if the market sees 2215ish.
These are based on the December contract!
**Technical Support:** 2102, 2070 and 1972
**Technical Resistance:** 2159 and 2211
e-mini S&P Futures Day Trading Ideas
**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
ES Day Trade Sell Levels: 2157 and 2169
ES Day Trade Buy Levels: 2123 (minor), 2110, 2100, and 2083
In other commodity futures and options markets....
June 23 - Go long corn futures near 392 using mini contracts (the beginning of a scale trade). Full-sized contracts can be used if available margin and risk tolerance is appropriate.
June 30 - Buy September mini (or full-sized) wheat near $4.47.
July 5 - Add to the long mini corn (or full sized) near $3.45.
July 14 - Sell the corn add-on near 370 to lock in a profit (hold the original entry).
July 29 - Buy mini corn future near $3.33 to average entry cost lower.
July 29 - Buy mini wheat to add to our long and adjust the average position entry to $4.25ish.
August 18 - Sell half of the mini wheat position to lock in a profit of about 20 cents on the add-on contract. We'll hold the original position in hopes of a continued upswing.
August 29 - Sell December live cattle 99 put for about 140 (or $560).
September 14 - Buy the January soybean 10.60 calls for about $300.
September 20 - Sell the January soybean 10.60 calls for
(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)
Carley GarnerDeCarley Trading (a division of Zaner)
www.HigherProbabilityCommodityTradingBook.com **There is substantial risk of loss in trading futures and options.** These recommendations are a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years. There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in a similar directional manner during a certain calendar year. While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing. Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations. No representation is being made that price patterns will recur in the future.