May 8, 2015 Newsletter

May and June 2015 equities outlook and trading multiple time frames

May 8th, 2015 - Issue #786

In This Issue

1. May-June 2015 Outlook: Win, Place, or Show
2. Lean Hogs Help Clarify Multiple Time Frame Use for Futures Trading
3. Economic Calendar

1. May-June 2015 Outlook: Win, Place, or Show

TTN March April 2015 Outlook: Award Season

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Many of our predictions from March came through as reliably as the Kentucky Derby favorite American Pharoah. As predicted, more central banks joined in on the rate cutting frenzy -- most notably the Bank of Korea executed a surprise 25 basis point rate cut in March, taking its key rate to a record low 1.75%. China's central bank offered up a cut in the reserve requirement ratio, and now there is even talk of Beijing style QE being considered.

The strong dollar had the expected effect on Q1 corporate results: many firms in Europe benefitted from currency tailwinds, while US firms that missed consensus numbers invariably complained about FX headwinds and large multinationals like IBM, P&G, and J&J each took more than a $1 billion revenue haircut in Q1. Energy companies made rapid cutbacks in capital expenditure forecasts and reduced their workforces in the face of lower energy prices. As expected, in April the US rig count reached a 50% drop from its peak level in just six months, and that has helped stabilize oil prices, though the extent of the energy rebound has been somewhat surprising. The sudden collapse in oil last year has continued to weigh on global inflation readings, while the expected economic benefits of cheaper energy have not yet passed through as of the lackluster first quarter.

Looking out to the next two months a variety of issues could come to the forefront, but only a handful could win, place, or show when it comes to their impact. The favorite topic of the handicappers is the timing of Fed rate liftoff and whether markets are psychologically ready to handle the move. Conversely, other central banks are whipping up more stimulus, and the latest conjecture is about China going all in. In Europe, the leading topics are whether Greece will be disqualified from the euro zone, and a contentious UK election at a time when that nation is questioning its role in the EU. Lastly, the Iran nuclear talks are headed into their final lap, with a binary outcome for energy markets and Middle East stability.

And They're Off!

Market participants have become obsessed with Fed monetary policy as it is about to diverge from the global norm of ever easier policy. While policy in Asia and Europe has just recently turned to additional extraordinary accommodation, the US central bank continues to signal that it will be tightening in the not too distant future. The question has become exactly when rate lift off will occur, but the Fed has not been obliging about an answer.

The Fed dropped its "patient" language at the March FOMC meeting and its final calendar reference to forward guidance in its April statement. At the same time it downgraded commentary on the current economic environment in both statements, though this was largely attributed to "transitory" factors. In their interstitial speeches both hawks and doves at the Fed seem to largely agree that the seasonal Q1 slowdown will pass and the data that policy is directed by will turn up again soon.

Economic reports in early May could start the countdown to race time.

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2. Lean Hogs Help Clarify Multiple Time Frame Use for Futures Trading

By: Ilan Levy-Mayer

Lean Hogs Help Clarify Multiple Time Frame Use for Futures Trading

Trading is a constant learning experience - as you change as a trader, the markets evolve as well, and so does the technology. My inbox is full of "offers" that will teach me how to make money from the comfort of my home. I frequently laugh at these emails, or delete them if I get annoyed. Then, if I get really irritated by the ridiculous promises made, I will actually take the time to call them out.

Trading is one of the harder things I have done. Emotionally and mentally, it is a very tough endevour. One method I've found that helps me filter out trades and sometimes noise in the market, is a very simple one...using multiple time frames.

How to Use Multiple Frames

Here's an example of effectively using multiple frames: use a 30 minute chart on the mini Russell while daytrading, viewing that as your "longer time frame." Then, look for a trigger using a smaller time frame like the 10 minute charts for example. Another example when I look at swing trades (like the one below of the Lean Hogs market) is to look at a weekly chart and then go down to the daily chart. Both charts are below for your review.
- See more at: Investing Strategies

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
0:00 AM CDT - JOLTS-Job Openings(Mar)
11:00 AM CDT - WASDE Report & Crop Production
1:00 PM CDT - Treasury Budget(Apr)
6:00 AM CDT - MBA Mortgage Purchase Index
7:30 AM CDT - Export(ex-ag) & Import(ex-oil) Prices(Apr)
7:30 AM CDT - Retail Sales(Apr)
7:30 AM CDT - Retail Sales(ex-auto)(Apr)
9:00 AM CDT - Business Inventories(Mar)
9:30 AM CDT - API & DOE Energy Stats
2:00 PM CDT - Dairy Products Sales
LT: May Cocoa(ICE)
7:30 AM CDT - USDA Weekly Export Sales
7:30 AM CDT - Initial Claims-Weekly
7:30 AM CDT - Core PPI & PPI(Apr)
9:30 AM CDT - EIA Gas Storage
3:30 PM CDT - Money Supply
LT: May Corn(CBT)
May Wheat(CBT)
May Rough Rice(CBT)
May Oats(CBT)
May Soybeans,Soymeal,Soyoil(CBT)
May Lean Hogs(CME)
May Lean Hogs Options(CME)
Jun Crude Lt Options(NYM)
7:30 AM CDT - Empire Manufacturing(May)
8:15 AM CDT - Capacity Util & Industrial Prod(Apr)
9:00 AM CDT - Mich Sentiment(May)
11:00 PM CDT - NOPA Crush
3:00 PM CDT - Net Long-Term TIC Flows(Mar)
LT: May Lumber(CME)
May Nikkei Options(CME)
May DJIA Options(CME)
May S&P 500 Options(CME)
May E-Mini S&P 500 Options(CME)
May NASDAQ Options(CME)
May E-Mini NASDAQ Options(CME)
May Russell Options(CME)
Jun Sugar-11 Options(ICE)
Jun Orange Juice Options(ICE)
9:00 AM CDT - NAHB Housing Market Index(May) FN: May Lumber(CME)
LT: May Eurodollar(CME)
May Coffee(ICE)

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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