Carley Garner
DeCarley Trading
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.
If the Fed's trajectory of interest rates are truly data dependent, it seems the road is paved for another hike sooner rather than later. Like we said...confusing.
Treasury futures broke higher, compliments of Janet Yellen
Although sluggish ahead of the long weekend, bonds and notes found bullish interest on the heels of Janet Yellen's dovish speech. Volatility was exacerbated by the fact that the market had been consolidating for several days before making the move.
Yet, the the ZB chart suggests prices "should" find resistance near the upper end of the current trading channel. The ZN, on the other hand, has now retraced roughly 62% of the previous decline. According to Fibonacci theory, this should be "enough". Accordingly, it feels like the upside should be limited from here. Likewise, Treasury auctions conducted on Monday and Tuesday were graded a C- by Rick Santelli due to a lack of demand.
Treasury Futures Market Analysis
**Bond Futures Market Consensus:** Both the ZN and the ZB should be near resistance levels. Reversal?
**Technical Support:** ZB : 162;18, 160'27, 156'25, and 153'26 ZN: 129'03, 128'07 and 127'23
**Technical Resistance:** ZB : 164'20, 165'14, 167'14, and 169'14 ZN: 130'05, 131'002, 131'29, and 132'20
Well, 2064 is probably in play in the ES Futures
Anybody trying to trade futures over the long holiday weekend, likely had a rough go at things. Price action has been choppy, and completely against what historical stats suggested would be most likely on the Thursday through Monday surrounding Easter.
At this point, it is hard to fight Yellen and the trend. We have to go with the premise that the S&P will seek to test it's downtrend resistance near 2060/2064. At this pace, we could be there in a day or two.
With all of that said, the monthly employment report is already upon us. On Friday morning we'll hear the latest jobs data; with prices at already lofty levels we can't help but feel like the short squeeze will continue into the report. If it does, however, there "should" be a good opportunity for the bears "up there". We will likely be shopping around for short call option opportunities!
Stock Index Futures Market Ideas
**e-mini S&P Futures Market Consensus:** The mini correction in the ES didn't live up to our standards. Nevertheless, the bull market is back and 2060/2064ish will probably be seen shortly.
**Technical Support:** 2006, 1955, 1899, 1804
**Technical Resistance:** 2064, 2096, and 2112
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: 2047, 2060, and 2066
ES Day Trade Buy Levels: 2030, 2017, 2011
In other commodity futures and options markets....
November 24 - Roll long December corn into March to avoid delivery.
January 14 - Sell March 10-year note 129.50 calls for about 19 ticks, or $300.
February 3 - Buy back the March 10-year note 129.50 call, and replace it with a 2 short April 132 calls and 1 short 128 put. This spreads the risk out on both sides of the market, and slows things down.
February 9 - Buy back the short ZN 128 put, replace it with 2 (double the quantity) of the 129 puts. This brings in more premium, and offers a better hedge to the upside risk.
February 11 - Roll ZN strangles higher to the 133.50/130.50 strikes to try to keep up with the rally and volatility.
February 17 - Buy back April ZN 133.50 calls to lock in a gain.
February 18 - Sell April ZN 131.50 calls for about 28 ticks to hedge the short 130.50 puts remaining from the original strangle.
March 2 - Buy back April ZN 131.50 calls near 8 ticks to lock in a gain.
March 3 - Sell April 130 calls for about 29 ticks to bring in more premium and hedge our short put position.
March 8 - Sell a May ZN 131 call for about 29 ticks. This brings our trade to only slightly bullish.
March 10 - Buy back the May ZN 131 call and all of the April 130 calls. This locks in profits on the call side of the trade, we'll hold the puts in hopes of a bounce.
March 14 - Sell May ZN 129 calls for about 40 ticks, to bring in more premium and hedge our downside risk.
March 17 - Buy back all April puts and May calls, then sell a fresh strangle using the May 130/128.50 strikes. This gets us into a more reasonable position which stands to
profit from premium erosion (the previous trade was largely intrinsic value at the point of exit).
March 29 - Buy back April ZN puts to lock in a profit.
(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)
**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 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.
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.
If the Fed's trajectory of interest rates are truly data dependent, it seems the road is paved for another hike sooner rather than later. Like we said...confusing.
Treasury futures broke higher, compliments of Janet Yellen
Although sluggish ahead of the long weekend, bonds and notes found bullish interest on the heels of Janet Yellen's dovish speech. Volatility was exacerbated by the fact that the market had been consolidating for several days before making the move.
Yet, the the ZB chart suggests prices "should" find resistance near the upper end of the current trading channel. The ZN, on the other hand, has now retraced roughly 62% of the previous decline. According to Fibonacci theory, this should be "enough". Accordingly, it feels like the upside should be limited from here. Likewise, Treasury auctions conducted on Monday and Tuesday were graded a C- by Rick Santelli due to a lack of demand.
Treasury Futures Market Analysis
**Bond Futures Market Consensus:** Both the ZN and the ZB should be near resistance levels. Reversal?
**Technical Support:** ZB : 162;18, 160'27, 156'25, and 153'26 ZN: 129'03, 128'07 and 127'23
**Technical Resistance:** ZB : 164'20, 165'14, 167'14, and 169'14 ZN: 130'05, 131'002, 131'29, and 132'20
Well, 2064 is probably in play in the ES Futures
Anybody trying to trade futures over the long holiday weekend, likely had a rough go at things. Price action has been choppy, and completely against what historical stats suggested would be most likely on the Thursday through Monday surrounding Easter.
At this point, it is hard to fight Yellen and the trend. We have to go with the premise that the S&P will seek to test it's downtrend resistance near 2060/2064. At this pace, we could be there in a day or two.
With all of that said, the monthly employment report is already upon us. On Friday morning we'll hear the latest jobs data; with prices at already lofty levels we can't help but feel like the short squeeze will continue into the report. If it does, however, there "should" be a good opportunity for the bears "up there". We will likely be shopping around for short call option opportunities!
Stock Index Futures Market Ideas
**e-mini S&P Futures Market Consensus:** The mini correction in the ES didn't live up to our standards. Nevertheless, the bull market is back and 2060/2064ish will probably be seen shortly.
**Technical Support:** 2006, 1955, 1899, 1804
**Technical Resistance:** 2064, 2096, and 2112
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: 2047, 2060, and 2066
ES Day Trade Buy Levels: 2030, 2017, 2011
In other commodity futures and options markets....
November 24 - Roll long December corn into March to avoid delivery.
January 14 - Sell March 10-year note 129.50 calls for about 19 ticks, or $300.
February 3 - Buy back the March 10-year note 129.50 call, and replace it with a 2 short April 132 calls and 1 short 128 put. This spreads the risk out on both sides of the market, and slows things down.
February 9 - Buy back the short ZN 128 put, replace it with 2 (double the quantity) of the 129 puts. This brings in more premium, and offers a better hedge to the upside risk.
February 11 - Roll ZN strangles higher to the 133.50/130.50 strikes to try to keep up with the rally and volatility.
February 17 - Buy back April ZN 133.50 calls to lock in a gain.
February 18 - Sell April ZN 131.50 calls for about 28 ticks to hedge the short 130.50 puts remaining from the original strangle.
March 2 - Buy back April ZN 131.50 calls near 8 ticks to lock in a gain.
March 3 - Sell April 130 calls for about 29 ticks to bring in more premium and hedge our short put position.
March 8 - Sell a May ZN 131 call for about 29 ticks. This brings our trade to only slightly bullish.
March 10 - Buy back the May ZN 131 call and all of the April 130 calls. This locks in profits on the call side of the trade, we'll hold the puts in hopes of a bounce.
March 14 - Sell May ZN 129 calls for about 40 ticks, to bring in more premium and hedge our downside risk.
March 17 - Buy back all April puts and May calls, then sell a fresh strangle using the May 130/128.50 strikes. This gets us into a more reasonable position which stands to
profit from premium erosion (the previous trade was largely intrinsic value at the point of exit).
March 29 - Buy back April ZN puts to lock in a profit.
(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)
**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 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.
Due to the volatile nature of the futures markets some information and charts in this report may not be timely. There is substantial risk of loss in trading futures and options. 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 and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. 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.
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