Although the Federal Reserve (the Fed) has been on pause when it comes to interest rate hikes since the summer of 2023, economic uncertainty still looms. The Fed is reducing the size of its balance sheet by decreasing holdings of Treasury and mortgage backed securities, and it is ambiguous on when the first rate cuts will take place.
Given the uncertain economic environment, it is as important as ever to manage Treasury yield curve risk.
Treasury yields
The United States Treasury market stands as one of the largest and most crucial financial markets globally, playing a pivotal role in the functioning of the global economy. The magnitude of the U.S. Treasury market reflects its significance as a safe haven for investors, central banks and institutions seeking low-risk assets. Treasury maturities across the yield serve as an important reference point for risk management across various markets.
* 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 here in 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 judgement in trading.
The above sources were compiled from sources believed to be reliable. Cannon Trading assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The closing times for certain contracts may have been rescheduled.
* 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 here in 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 judgement in trading.
Traders, keep an eye out for market movement across asset classes for trading opportunities – including beyond those markets you’re typically focused on. With dozens of commodities available for trading on the major U.S. futures exchanges, there’s potential out there.
Softs:
Among the market sectors most traders follow closely, “Softs” is not high up the list. Yet similarly to other well-known futures contracts such as stock indexes, interest rate futures, energies, metals and grains, the softs category includes some of the world benchmarks for their underlying commodity, such as cocoa, coffee, orange juice and sugar.
As well, we’re seeing recent price movement in some of these commodities that can be described as exceptional. For example, it’s not hyperbole to say that the price of March cocoa has skyrocketed over the last month – from both sides of ±$4,200/ton coming into the new year to today’s $5,410/ton close. That’s a ±$12,000 per contract move (contract size: 10 metric tons). This is an all-time high for the contract.
After trading up to its own all-time highs above $4.00/lb. around mid-Nov., March orange juice sliced (pun intended) ±25% of its contract value, down below $3.00/lb. by mid-Jan with a $2.9065 close on Jan. 16. This is a ±$15,000 move. Yet this sell-off was brief as the contract then surged ±$1.00 back to today’s 10-cent up limit close of $3.9095, another ±$15,000 per contract move – in 16 trading days.
Indexes:
Telling of all-time-highs would be lacking today without mentioning the E-mini S&P 500 and E-mini Nasdaq. As of this typing the March E-mini S&P 500 futures contract is trading up ±40 points, nearly 10 points above Monday’s intraday high and ±15 points above the 5000 threshold. As well, the March E-mini NASDAQ has made a ±200-point move up to its own all-time highs at ±17,850. For the E-mini S&P 500, this marks a ±$40,000 per contract move since its last recent low back on Oct. 27.
Energy:
In a comparison of contrasts, March natural gas settled below $2.00 today to set a new life-of-contract low and furthering a ±$4,000 per contract move in less than a month – with scarcely a retort by bulls.
* 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 here in 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 judgement in trading.
Understanding psychological biases at work that can affect your trading plan
List generated by By John Thorpe, Senior Broker
Technical analysis is not a flawless science, and it is susceptible to various biases that can impact trading decisions and performance. Recognizing and addressing these biases is essential for becoming a more disciplined and successful trader.
Here are some common technical analysis biases and strategies to avoid or overcome them:
Confirmation Bias:
Bias: This occurs when traders only seek or give importance to information that confirms their existing beliefs or positions.
Avoidance Strategy: Actively seek out information and technical signals that might contradict your initial analysis. Be open to changing your view based on objective data rather than personal bias.
Overfitting Bias:
Bias: Overfitting happens when traders use too many technical indicators, parameters, or complex strategies to fit historical data perfectly, but these strategies may not perform well in future markets.
Avoidance Strategy: Keep your technical analysis simple and use a limited number of well-established indicators and patterns. Focus on robust strategies that have demonstrated reliability over time.
Recency Bias:
Bias: Traders tend to give more importance to recent price movements and patterns, assuming they will continue, while ignoring longer-term trends or historical context.
Avoidance Strategy: Consider a longer time horizon and look at historical price data to gain perspective. Avoid making impulsive decisions based solely on recent price action.
Anchoring Bias:
Bias: This bias occurs when traders fixate on a specific price level or a reference point, often the entry price, and refuse to adjust their positions or exit strategies accordingly.
Avoidance Strategy: Regularly reassess your positions and set stop-loss and take-profit levels based on current market conditions rather than anchoring to an arbitrary point.
Availability Bias:
Bias: Traders might rely too heavily on readily available information or recent news, leading to biased analysis and decision-making.
Avoidance Strategy: Seek a variety of information sources and avoid making hasty decisions based solely on the latest news. Maintain a broader perspective on market fundamentals.
Gambler’s Fallacy:
Bias: Traders may believe that past events, like a series of losses, increase the likelihood of future events, such as a win, even though markets are not governed by probability in the same way as games of chance.
Avoidance Strategy: Trade based on sound technical and fundamental analysis rather than expecting a change in luck. Each trade should be evaluated independently.
Emotional Bias:
Bias: Emotional responses, such as fear and greed, can cloud judgment and lead to impulsive decisions.
Avoidance Strategy: Develop a trading plan with predefined entry and exit points, risk tolerance, and position sizing. Stick to your plan and avoid letting emotions drive your actions.
Hindsight Bias:
Bias: After a trade has concluded, traders may believe they knew the outcome all along, leading to overconfidence in their abilities.
Avoidance Strategy: Keep a trading journal to record your analysis, decisions, and outcomes. This will help you learn from your experiences and avoid hindsight bias.
Self-Attribution Bias:
Bias: Traders may attribute successful trades to their skill and unsuccessful trades to external factors or bad luck.
Avoidance Strategy: Be honest with yourself about your strengths and weaknesses as a trader. Analyze both winning and losing trades to identify areas for improvement.
Anxiety Bias:
Bias: Anxiety can lead to hesitation or overtrading, causing traders to miss opportunities or make impulsive decisions.
Avoidance Strategy: Implement stress-reduction techniques, maintain discipline, and stick to a well-defined trading plan to mitigate anxiety-related biases.
Being aware of these biases is the first step toward becoming a more rational and disciplined trader. It’s also beneficial to continuously educate yourself, practice risk management, and seek feedback from mentors or peers to improve your trading skills and reduce the impact of these biases on your performance.
* 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 here in 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 judgement in trading.
The Week Ahead: Earnings, Heavy Fed speaker week, light data week, Thursday WASDE for the Ag traders among us.
By John Thorpe, Senior Broker
McDonalds is a featured Dow stock on the earnings front this week, after todays close,
Other stocks of note this week. Eli Lilly before the open Tuesday, expectations are for a boost of 2.36 EPS per analysts on rev of 9 Billion. After Wednesday’s close Walt Disney will report , with expectations of 1.04 EPS on revenue of 23.8 billion.
In case you missed the 60 Minutes interview with Fed Chair Powell Sunday night. Here is a brief synopsis:
Noting that US growth is “solid” and the labor market “strong”, Jerome Powell said in a 60 Minutes TV interview on Sunday that the Federal Reserve “can approach the question of when to begin to reduce interest rates carefully.” Powell repeated comments from last week’s FOMC press conference that the Fed wants to see more progress on inflation before cutting rates. Powell downplayed chances that the Fed would begin cutting rates at its next meeting in March, saying policymakers want to be as confident as they can that inflation is on the path to the Fed’s two percent target. Yet he said “almost every single person” on the FOMC believes it would be appropriate to begin cutting rates sometime this year.
Tuesday we have 4 Fed Speakers , Mester, Kashkari, Collins, and Harker, Wednesday we have 4 again,
Kugler, Collins for a second time in the week, Barkin and Brown. On Thursday two speeches by the same governor Barkin, 3 hours apart and a lone speaker rounds out the week on Friday, Logan.
And on Thursday the USDA Supply and Demand numbers will be released for the country and the world.
Make it a solid week and always, “plan the trade and trade the plan”
* 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 here in 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 judgement in trading.
Important Notices – 1099 Forms, CME Fees, FN & LT Days
Trading Resource of the Week – Futures Hedging Self Study Guide
Hot Market of the Week – March Copper
Broker’s Trading System of the Week – ES Day Trading System
Trading Levels for Next Week
Trading Reports for Next Week
Important Notices –
1099 forms will be generated for all futures trading accounts held by US clients that placed any trades during the 2023 calendar year. Traders should expect to receive their 1099 forms via mail, email or through their portal in early February.
1099 forms will be provided directly from the FCM to the client.
CME Fees Increase Update:
In a Special Executive Report released by the CME Group, it was announced that effective February 1, 2024, a number of transaction fees will see amended (increased) exchange / transaction fees.
Effective February 1, the CME Group is raising the exchange fees for a number of futures contracts.
For the COMEX metals products: Gold (GC), Silver (SI), Copper (HG) and Platinum (PL) fees are going up by 5 cents, from $1.55 to $1.60
For the COMEX E-mini metals products: miNY gold (QO), miNY silver (QI), miNY copper (QC) fees are going up by 25 cents, from $0.75 to $1.00
566 earnings reports next week
WASDE Report
Below are the contracts which are entering First Notice or Last Trading Day for the upcoming month. Be advised, for contracts that are deliverable, it is requested that all LONG positions be exited two days prior to First Notice and ALL positions be exited the day prior to Last Trading Day.
Trading Resource of the Week : Futures Hedging Self Study Guide!
Self-Study Guide to Hedging with Grain and Oilseed Futures and Options. Regardless if you are a farmer, rancher or simply looking to trade grains and livestock futures, this guide will help you understand the ins and outs of trading and hedging using futures and options.
Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.
March copper completed its first upside PriceCount objective and has settled into a range bound trade. IF the chart can resume its rally with new sustained highs, it would project a possible run to the second count in the 4.03 area, consistent with a challenge of the August high.
PriceCounts – Not about where we’ve been , but where we might be going next!
The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved. It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk. Learn more at www.qtchartoftheday.com
Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.
Broker’s Trading System of the Week
With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.
Would you like to receive daily support & resistance levels?
* 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 here in 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 judgement in trading.
Big NFP / unemployment report tomorrow an hour before the stock market opens.
This is a market moving report and indices, bonds, currencies, metals and other markets will see some large swings.
I personally like to be out before the report, wait a few minutes for the zig zag to relax and then look to re-enter.
On different note:
Upgrades to the event contract suite offer more opportunities for you to trade your market views.
The size of an event contract is increasing to $100
Updated sizes align more closely to the probability of a trade’s success. For example, if the price of a position is $65 there’s approximately 65% probability that this event will occur.
Introducing longer-dated expiries
Add quarter- and year-end event contracts on E-mini S&P 500 and Nasdaq-100 futures to your portfolio. With the addition of more expiries, place your long-term prediction on the Equity Index futures markets.
What are event contracts?
With event contracts, you can express your views on whether the markets will close above a certain price by choosing a “yes” or a “no” prediction. These contracts offer an intuitive, limited-risk way to trade 11 of the world’s most important futures markets.
* 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 here in 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 judgement in trading.
The last few FOMC meetings I looked for trades until around 930 AM Central time and then somewhat “took a step back”.
I would then follow closely around 1 PM Central when the announcement comes out but try to not pull the trigger until 1:15/ 1:30 when the smoke clears.
This is of course just my personal preferences and every trader is different.
Take notes after the trading session so you can look back and refer the next FOMC meeting….
Below are some additional tips/observations I have taken notes of for myself:
· ·Reduce trading size
· Be extra picky = no trade is better than a bad trade
· Choose entry points wisely. Look at longer time frame support and resistance for entry. Take the approach of entering at points where you normally would have placed protective stops. Example, trader x looking to go long the mini SP at 4425.00 with a stop at 4419.00, instead “stretch the price bands” due to volatility and place an entry order to buy at 4419.75 and place a stop a few points below in this hypothetical example ( consider current volatility along with support and resistance levels).
· Expect the higher volatility during and right after the announcement
· Expect to see some “vacuum” ( low volume, big zigzags) right before the number.
· Consider using automated stops and limits attached to your entry order as the market can move very fast at times.
· Know what the market was expecting, learn what came out and observe market reaction for clues
· The rate announcement comes out exactly at 1 PM central. As of this morning there is a 98% chance of no change in rates.
· Traders will pay EXTRA attention to the language and the Q&A which starts at 1:30 PM Central
* 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 here in 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 judgement in trading.
The Week Ahead: A Big Data Rich Week! For the markets.
By John Thorpe, Senior Broker
The Super Bowl Teams are set for two weeks from now- Congrats to the NFL Conference Champions! Kansas City and San Francisco!
Quite a bit of excitement surrounds the markets this week as the following will grace our calendars.
Earnings, Jay Powell, Data.
You will have a hard time ignoring many of these direction moving events.
First, on Tuesday , Consumer Confidence and Jolts and both will be released @9:00am CST.
Second, A one-two punch, GOOGL announces earnings after the close. Average analysts guess is $1.59 EPS on Revenue of 85.3 Bil. We aren’t done, MSFT also announces after the close. $2.78 EPS and 61.1 bil revenue are the estimates here. (day one of the Fed meeting also occurs today) Other important earnings , UPS, SBUX, PFE, GM, AMD .
Then on Wednesday, FOMC Rate decision @ 1:00 pm CST , expectations are to remain. No change,
Jay Powell presser 30 minutes later.
We kick off Thursday @ 7:30 am CST with Jobless claims, the 4 week MA is 202k
And hour and a half later , ISM Manufacturing index is released, this has been in contraction the past 14 weeks. Expectations are for much the same.
The Biggest news of the day will likely be earnings from AMZN (exp .80 EPS, rev +11.4% and AAPL (exp 2.10 eps, rev 117.9 bil) after the close.
Fireworks Friday begins at 7:30 am CST with the nonfarm payrolls, here are the expectations from Econoday.
Make it a solid week and always, “plan the trade and trade the plan”
* 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 here in 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 judgement in trading.
Important Notices – 2024 World Cup Trading Championship
Trading Resource of the Week – FREE Trader’s Consultation
Hot Market of the Week – April Hogs
Broker’s Trading System of the Week – NQ Swing Trading System
Trading Levels for Next Week
Trading Reports for Next Week
Important Notices –
The 2024 World Cup Trading Championships® are just around the corner.
You are invited to enter the ultimate trading challenge, where some of the world’s best Futures and Forex traders compete.
The World Cup Trading Championships have been held since 1983 and are the most prestigious trading competitions in the industry. The winners of each division will prove that they are the best of the best.
The top profitable Entrants will be eligible to receive a magnificent pewter Bull and Bear trophy or a beautiful crystal Bull and Bear Trophy.
Real-money competitions based on net returns – no entry fee required.
Take on traders from across the globe to compete for coveted Bull & Bear trophies, glory, and new career opportunities.
Contact us at 1-310-859-9572 or Visit Us on the Web
Trading Resource of the Week : Book a Trading Consultation ( FREE, no obligation!)with a Cannon Trading Series 3 Broker
Available to both Clients and prospects!
Immediately increase your software and computer competence
Valuable order entry tips
Help create a personalized workspace
Compare multiple trading software
Get to know your Broker
Learning Options strategies
In this complimentary call or screen share session, which can last up to 30 minutes, you will have the opportunity to seek guidance and pose questions to our expert on a wide range of topics. These topics include, but are not limited to:
– Gaining insight into day trading margins.
– Assessing and reviewing various trading platforms and technologies.
Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.
April hogs stabilized their slide after completing the first downside PriceCount objective. Now, on the correction higher, the chart has activated upside counts and is taking aim at the first target in the 84.98 area.
PriceCounts – Not about where we’ve been , but where we might be going next!
The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved. It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk. Learn more at www.qtchartoftheday.com
Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.
Broker’s Trading System of the Week
With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.
The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.
Would you like to receive daily support & resistance levels?
* 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 here in 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 judgement in trading.
RISK DISCLOSURE: Past results are not necessarily indicative of future results. The risk of loss in futures trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.
