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Holiday Market Recap & Economic Reports 12.02.2014

Hello Traders,

For 2014 I would like to wish all of you discipline and patience in your trading!

Hello Traders,

Hope everyone enjoyed a nice holiday break with their loved ones!

What a volatile start for the month of December!!

It started with over the Thanksgiving break, when OPEC met during thin holiday markets and the reaction sent vibes across many different markets with a strong sell off in energy and metals that started Thursday, Friday and Sunday night but then some time around midnight pacific time last night, big reversal on the4se sectors as crude oil bounced over $6 from the lows, silver almost $2.50 off the lows….extreme volatility.

Quick overview from below: Weekly Market Update: Oil Carnage Spills Into Deflation Fears
Fri, 28 Nov 2014 13:53 PM ESTOPEC’s decision to refrain from a production ceiling cut drove most of the trading action this week. As the cartel confirmed on Thursday that it would not reduce its 30M bpd production target, oil prices plummeted to multi-year lows dragging down energy related equities, and oil-leveraged currencies like the Ruble and Norwegian Krone hit multi-year lows. The move in oil reinvigorated the broader market debate about whether the biggest impact of cheap energy will be the benefit to consumers or the threat of creating a deflationary wave. This was further substantiated by more weak CPI readings out of Europe and Japan. The other big trend of the week, the start of the holiday shopping season, got off to a solid start with preliminary Thanksgiving Day and Black Friday sales showing good year over year growth. The second read on US Q3 GDP came in better than expected, further validating the US as the leading edge of the economic recovery. For the week, the DJIA rose 0.1%, the S&P500 gained 0.2%, and the Nasdaq added 1.7%.Third-quarter US economic growth was revised higher in the preliminary GDP reading, to +3.9% from +3.5% in the advance reading, well ahead of the +3.3% expected. The economy has grown at or above a 3.5% quarterly rate for four out of the last five quarters, although many observers suggest this pace of growth is not sustainable. Spending on investment in housing and by business grew strongly over the advance reading. In other US data, the headline October durable goods was up very slightly, driven up by a spike in bookings for military aircraft, but the core business investment segment looked weak. October personal income and spending was slightly lower than expected but bounced back from September’s flat reading, returning to the steady rate of growth seen over recent months. The PCE series, the Fed’s preferred measure of inflation, was pretty much flat in October.

Oil prices fluctuated in the first half of the week as major oil producers horse traded ahead of Thursday’s OPEC meeting in Vienna. Prior to the meeting, oil ministers from Saudi Arabia and Venezuela met with non-OPEC nations Russia and Mexico to discuss falling prices. The four countries, which together account for about a third of global oil production, agreed to “monitor” prices and come together again in three months to assess the market. Interestingly, Rosneft CEO Sechin, the de facto oil tsar of Russia who was at the four-party meeting, said that even oil prices falling below $60/barrel would not force Russia to cut production. As the week wore on, it became clear that OPEC would not cut its production ceiling, and after the official announcement on Thursday crude futures plunged nearly 10%, dragging down oil-related equities. OPEC took the stance that the cartel does not want to give up market share and put the onus on the “new” players (i.e. North American shale oil) to reduce their production to stabilize the oversupplied market. For its part, OPEC indicated it may better enforce the cartel’s 30 million bpd targeted production ceiling, which could trim 300 thousand bpd of overproduction if members adhere to their quotas. Brent crude ended Friday testing the $70/barrel level and WTI finished around $66/barrel.

Earnings reports were mixed this week. Deere’s fourth-quarter results were stronger than expected but declined on a y/y basis, while the initial FY15 outlook was not very positive. The firm warned that farm equipment sales and profits would keep falling in 2015, but on the conference call insisted that next year would represent the trough in the cycle. Hewlett-Packard shares surged to a fresh three year high as headline results were about in line, but underlying trends continued to improve. Executives said that for the first time in several years HP saw operating margin expansion in every one of its business segments. Tiffany shares rose on Tuesday despite a slight miss on the top and bottom line for Q3 and trimming its fiscal year revenue guidance. Same store sales in the Americas region were a bright spot for the luxury retailer, rising in 11%, helping to offset a drop in Asia comps.

For the forex market, disinflation remained a key theme in both Asia and European. Dealers note that decline in oil prices following the OPEC meeting would make it even more difficult for central banks in Europe and Japan to push up inflation. Emphasizing that issue, the Euro Zone Nov Flash CPI estimate came in line with expectations, but matched a 5-year low. The focus is now turning to next Thursday’s ECB rate decision for any hints that the central bank would be the next to carry the QE baton. ECB council members have stated that they want more time to assess the effects of prior stimulus measures to materialize, but European bond yields moved back to record lows in both core and peripheral nations on QE hopes.

The Shanghai Composite was lifted to fresh 3-year highs of 2,650 this week by the momentum of last Friday’s surprise interest rate cut. PBoC has solidified the easing bias of its “prudent” policy stance with more cosmetic liquidity injections. On Tuesday, the central bank’s offering yield in its 14-day repo operations was reduced by another 20bps to 3.20% – the 4th such cut in the cycle. Then on Thursday, PBoC deferred on further regular drain for the first time in 4 months, resulting in the net weekly injection of CNY35B, the biggest in 3 months. Increasingly proactive monetary policy has been further justified by more instances of deteriorating economic data out of the mainland, as China October industrial profits slumped by 2.1% y/y – the biggest decline since August 2012. Meanwhile in Hong Kong, the diminishing support for the Occupy Central movement has finally emboldened law enforcement to retake the protest site, as police moved in to clear the Mong Kok area, arresting student leaders and over 100 of their followers.

In Japan, the BOJ released the minutes from its controversial October policy meeting, when the central bank unveiled a fresh round of Quantitative Easing in a tight 5-4 vote. The minutes revealed that the dissenters feared the side effects of more QE, reinforcing the depth of the split in the policy committee and also suggesting the minority camp is well-entrenched in its position to take a less aggressive approach. Separately, the Cabinet Office November report maintained its overall economic assessment, but lowered its view on the Employment segment for the first time in 2 years. On Friday, Japan core CPI figures marked fresh multi-month lows, as slumping oil prices offered stiff resistance to the weak Yen in expanding Japan inflationary trend.




Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not indicative to future results.

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Futures Trading Levels

Contract Dec. 2014 SP500 Nasdaq100 Dow Jones Mini Russell Dollar Index
Resistance 3 2077.17 4387.17 17922 1184.40 89.11
Resistance 2 2070.58 4361.33 17866 1178.00 88.81
Resistance 1 2061.42 4325.17 17814 1165.70 88.41
Pivot 2054.83 4299.33 17758 1159.30 88.11
Support 1 2045.67 4263.17 17706 1147.00 87.71
Support 2 2039.08 4237.33 17650 1140.60 87.41
Support 3 2029.92 4201.17 17598 1128.30 87.01
Contract Feb. Gold Mar.Silver Jan. Crude Oil Mar. Bonds Dec. Euro
Resistance 3 1320.9 20.14 77.21 144 4/32 1.2603
Resistance 2 1271.0 18.48 73.37 143 23/32 1.2556
Resistance 1 1241.6 17.49 71.39 142 27/32 1.2515
Pivot 1191.7 15.82 67.55 142 14/32 1.2468
Support 1 1162.3 14.83 65.57 141 18/32 1.2427
Support 2 1112.4 13.17 61.73 141 5/32 1.2380
Support 3 1083.0 12.18 59.75 140 9/32 1.2339
Contract March Corn March Wheat Jan. Beans Jan. SoyMeal Jan. bean Oil
Resistance 3 399.8 640.5 1028.33 376.17 32.95
Resistance 2 395.3 624.3 1023.67 372.53 32.73
Resistance 1 392.5 615.5 1020.33 367.27 32.55
Pivot 388.0 599.3 1015.67 363.63 32.33
Support 1 385.3 590.5 1012.3 358.4 32.1
Support 2 380.8 574.3 1007.67 354.73 31.93
Support 3 378.0 565.5 1004.33 349.47 31.75
Economic Reports


All times are Eastern time Zone (EST)


Date 4:10pm Currency Impact Detail Actual Forecast Previous Graph
TueDec 2  3:00am EUR Spanish Unemployment Change 21.3K 79.2K
5:00am EUR PPI m/m 0.3% 0.2%
8:10am USD FOMC Member Fischer Speaks
8:30am USD Fed Chair Yellen Speaks
10:00am USD Construction Spending m/m 0.6% -0.4%
All Day USD Total Vehicle Sales 16.6M 16.5M
12:00pm USD FOMC Member Brainard Speaks


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 judgment in trading.

Tags: > Posted in: Crude Oil   | Future Trading News  

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