Cannon Trading Blog

Cannon Futures Weekly Letter Issue # 1204

• • Monday, Aug. 12 

    ·        “The crop report:” USDA World Supply & Demand, U.S. Crop Production

     

    Tuesday, Aug. 13

     

    ·        Producer Price Index / Core PPI

     

    ·        Notable Quarterly Earnings:

     

    → Home Depot (Mkt. Cap.: ±247B)

     

    Wednesday, Aug 14

     

    ·        Consumer Price Index / Core CPI

     

    ·        Notable Quarterly Earnings:

     

    → Tencent ADR (Mkt. Cap.: ±437B)

    → Cisco (Mkt. Cap.: ±184B)

    → UBS Group (Mkt. Cap.: ±92B)

     

    Thursday, Aug. 15

     

    ·        Initial Jobless Claims

     

    ·        Retail Sales

     

    ·        Industrial Production / Capacity Utilization

     

    ·        Empire Mfg. Survey

     

    ·        Philadelphia Fed. Manufacturing Survey

     

    ·        Notable Quarterly Earnings:

     

    → Walmart (Mkt. Cap.: ±546B)

    → Alibaba (Mkt. Cap.: ±190B)

    → Applied Materials (Mkt. Cap.: ±159B)

    → Deere & Co. (Mkt. Cap.: ±95B)

     

    Friday, Aug. 16

     

    • ·        Consumer Sentiment

• Futures 101: 25 Proven Strategies for Trading Options

  If you are currently trading options on futures or are interested in exploring them further, check out our newly updated trading guide, featuring 25 commonly used options strategies, including butterflies, straddles, strangles, backspread and conversions. Each strategy includes an illustration demonstrating the effect of time decay on the total option premium involved in the position.

  Options on futures rank among our most versatile risk management tools, and are offered on most of our products. Whether you trade options for purposes of hedging or speculating, you can limit your risk to the amount you paid up-front for the option while maintaining your exposure to beneficial price movements. To learn more about CME Group options, you can also visit our Options page

  Complete the simple form and you will receive a link to download the 25 Proven Strategies brochure immediately. This eBook is free to you and no-obligation. Learn about the 25 Proven Strategies for trading options on CME Group Futures for FREE!

• Hot Market of the Week – December Soymeal

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* 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.

Will the Markets “relax” a bit on Friday?

The V type of moves from one day to another does not make much sense….

For example, metals and stock index futures sold off extremely hard yesterday on the last hour of trading, YET an hour later on the reopen started a V shape type of reversal….

Make sure you have a game plan in mind and you have preset stops in your order entry ( my opinion) as the markets are moving way too fast to take the approach of ” “let see what the market does…”

Daily Levels for August 9th, 2024

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* 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 Stay Alert!

By Mark O’Brien, Senior Broker

General:  

High volatility across the major financial commodities carried forward from last week, particularly Monday.  Price ranges coming into today’s close include over 1200 points in the E-mini Dow Jones ($6,000 per contract), ±$82 for Dec. gold ($8,200 per contract), over 10,000 points for Bitcoin futures ($10,000 per contract), over 225 points in the E-mini S&P 500 ($11,250 per contract) and more than 1,200 points for the E-mini Nasdaq ($12,000 per contract).

If the rest of the week sees a falloff in unevenness among these markets – an unlikely presumption – it’ll be a short rest.  Next week another raft of economic data comes to the markets, including key inflation measurements with the release of the U.S. Labor Department’s Producer and Consumer Price Indexes (Tue. and Wed., respectively) and the Census Bureau’s Thurs. report on Retail Sales.

The following week, traders will turn their eyes and ears toward Jackson Hole, Wyoming and the world’s most exclusive economic get-together: the Federal Reserve Bank of Kansas City-hosted Economic Symposium.  And once again, the most hotly anticipated event will be a speech by Federal Reserve chair Jerome Powell that typically takes place on Friday morning.  Often his speech is a chance for the central bank to send a signal about monetary policy and in the context of the recent shakiness in financial markets, his words will make headlines.

So much for summer doldrums.

Energies: 

September crude oil jumped ±$2.00/ per barrel today on the heels of a six-week ±$10 per barrel slide from ±$83/barrel to $73/barrel going back to early July.  The rally ensued after data showed a bigger-than-expected draw in U.S. crude stockpiles which have declined for six straight weeks.  On the demand side, worries about weak oil demand in China persisted.  Reports today showed that China, the world’s biggest importer of crude reported its lowest average daily import level for the month of July since September 2022.  China’s imports of other major commodities including iron ore, coal, copper and natural gas have also lost momentum or at best remained flat in recent months.

Daily Levels for August 8th, 2024

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* 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.

Note About Recent Volatility:

The current trading environment is quite volatile and unpredictable to say the least. Most of our clearing houses have temporarily raised intraday margin requirements. Intraday price swings have been considerable. Be aware, be careful, don’t jump into stormy seas if you are not an experienced swimmer.

Many of us brokers here at Cannon have been around for many years and have seen some very wild times, such as during the COVID pandemic, the housing bubble collapse in 2006-2007 and the 9/11 terrorist attack in 2001. Some were trading during the Oct. 1987 crash. So, feel free to reach out to our experienced group. We are here to help.

First Notice & Last Trading Days:

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. If you have any questions please contact your broker.

Daily Levels for August 7th, 2024

Improve Your Trading Skills

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* 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.

I’ve received questions about price limits or circuit breakers applied to futures contracts, so here’s some clarification:

A price limit is the maximum move permitted for a futures contract.  When markets hit their price limit, different actions can occur depending on the product being traded. Markets may temporarily halt until price limits can be expanded, they may remain in a limit condition or they may stop trading for the day, based on regulatory rules.

The CME Group applies price limits to many futures contracts across assets classes including agricultural, energy, interest rates, equity index and others.

Here are some specifics related to equity index products, including the E-mini S&P 500, the E-mini Nasdaq, the E-mini Dow Jones, the E-mini Russell 2000 and others.

→ From 5:00 P.M. to 8:30 A.M. Sundays through Fridays as well as from 3:00 P.M. – 4:00 P.M., Mondays through Fridays, only 7% up-and-down price limits are effective.

→ From 8:30 A.M. to 2:25 P.M., Central Time, Mondays through Fridays, 7%, 13%, and 20% price limits are applied to the futures price.

∙ 7% price limit trading halt: 15 mins

∙ 13% price limit trading halt: 15 mins

∙ 20% price limit trading halt: rest of day

→ From 2:25 P.M. to 3:00 P.M., only the 20% price limit will be applied to the futures price.

CME Group U.S. equity index price limits are designed to coordinate with circuit breakers provisions as applied by the New York Stock Exchange (NYSE).

The 7%, 13%, and 20% price limits are calculated during the 30 seconds of trading using a volume weighted average price (VWAP), from 2:59:30 P.M. – 3:00:00 P.M.

Note to New Traders:

The current trading environment is quite volatile and unpredictable to say the least. Most of our clearing houses have temporarily raised intraday margin requirements. Intraday price swings have been considerable. Be aware, be careful, don’t jump into stormy seas if you are not an experienced swimmer.

Many of us brokers here at Cannon have been around for many years and have seen some very wild times, such as during the COVID pandemic, the housing bubble collapse in 2006-2007 and the 9/11 terrorist attack in 2001. Some were trading during the Oct. 1987 crash. So, feel free to reach out to our experienced group. We are here to help.

Daily Levels for August 6th, 2024

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

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* 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.

Cannon Futures Weekly Letter Issue # 1203

• Important Notices – Light Week Ahead
• Futures 101 – FOMC 101
• Hot Market of the Week – September 30 yr bonds
• Broker’s Trading System of the Week – Mini SP Day Trading System
• Trading Levels for Next Week
• Trading Reports for Next Week

Important Notices – Next Week Highlights:

• • After a busy calendar week that included an FOMC meeting, the monthly Non-farm payrolls report for July from the U.S. Labor Department and quarterly earnings reports from Mega-cap companies Microsoft, Meta (Facebook parent), Apple and Amazon, next week will see no first-string economic or earnings reports. With that said, this week’s turbulent market movement in stock index futures, precious metals and energies all making 2+, 3+ and even 4+ percent moves both up and down – including in both directions in within a single trade day – don’t expect next week’s price action to abate. With traders now looking out to the following week’s Producer & Consumer Price Index reports for more evidence the Fed is prepared to lower borrowing costs for the first time in months, as well as Retail Sales numbers, we expect stock index futures to stay unsettled. And with tensions escalating in the Middle East after three separate assassinations of figures taking part in the hostilities, energy and precious metals futures look to be equally on edge. This sets the stage for a potentially very active week for major commodities sectors.

• Futures 101: Key Elements of the Federal Reserve Statement

  The Federal Reserve released a significant policy statement on Wednesday, July 31, 2024, following its latest policy meeting. The statement provides an overview of the current economic conditions and outlines the Federal Reserve’s decisions and future considerations regarding monetary policy. In this analysis, we will dissect the key elements of the statement, examine the Federal Reserve’s stance on interest rates, and assess the potential for lower interest rates in the coming months.

  Economic Activity and Labor Market

  The statement begins by noting that recent indicators suggest economic activity has continued to expand at a solid pace. This is a positive sign, indicating that the economy is growing steadily. However, the statement also mentions that job gains have moderated, and the unemployment rate has moved up but remains low. This suggests that while the economy is growing, the labor market is experiencing some softening.

  The moderation in job gains and the slight increase in the unemployment rate could be indicative of a maturing economic expansion. It is not uncommon for job growth to slow down as an economy reaches its full employment level. The fact that the unemployment rate remains low, despite its recent uptick, suggests that the labor market is still relatively strong.

  Inflation

  Inflation is a critical factor in the Federal Reserve’s policy decisions. The statement highlights that inflation has eased over the past year but remains somewhat elevated. There has been further progress toward the Committee’s 2 percent inflation objective in recent months. This indicates that the Federal Reserve’s efforts to control inflation are having some effect, but inflation is still above the target level.

  The Committee’s goal is to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The statement notes that the risks to achieving these goals continue to move into better balance. This suggests that the Federal Reserve sees a more balanced risk environment, which could imply a less aggressive approach to further tightening monetary policy.

  Federal Funds Rate

  In support of its goals, the Federal Reserve decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. This decision reflects a cautious approach, as the Committee evaluates the impact of previous rate hikes on the economy and inflation. The statement emphasizes that the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks when considering any adjustments to the target range for the federal funds rate.

  The Committee explicitly states that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. This indicates that any rate cuts are contingent on clear evidence of sustained progress toward the inflation target.

  Balance Sheet Reduction

  The Federal Reserve will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. This ongoing reduction of the balance sheet is part of the Federal Reserve’s broader strategy to normalize monetary policy after the extraordinary measures taken during the pandemic. By reducing its holdings, the Federal Reserve aims to tighten financial conditions and help control inflation.

  Monitoring Economic Indicators

  The statement highlights the Federal Reserve’s commitment to monitoring a wide range of economic indicators, including labor market conditions, inflation pressures, inflation expectations, and financial and international developments. This comprehensive approach ensures that the Federal Reserve remains responsive to changing economic conditions and can adjust its policy stance as needed.

  Economic Growth and Labor Market

  The moderation in job gains and the slight increase in the unemployment rate suggest that the economy is experiencing some softening. If this trend continues, it could put downward pressure on inflation, making it easier for the Federal Reserve to consider rate cuts. However, the overall solid pace of economic activity suggests that any rate cuts would be contingent on a significant slowdown in growth or a deterioration in labor market conditions.

  Financial Conditions

  The Federal Reserve’s ongoing reduction of its balance sheet is another factor to consider. By reducing its holdings of Treasury securities and other assets, the Federal Reserve is effectively tightening financial conditions. If this tightening leads to a more pronounced slowdown in economic activity or if financial conditions become too restrictive, the Federal Reserve might be more inclined to consider rate cuts to support the economy.

  Global Economic Developments

  International developments also play a crucial role in the Federal Reserve’s policy decisions. Factors such as global economic growth, trade dynamics, and geopolitical risks can influence the U.S. economy and financial markets. Any significant adverse developments on the global stage could prompt the Federal Reserve to adopt a more accommodative stance, including the possibility of rate cuts.

  Federal Reserve’s Dual Mandate

  The Federal Reserve operates under a dual mandate: to achieve maximum employment and maintain stable prices. The statement indicates that the risks to achieving these goals are moving into better balance. This suggests that the Federal Reserve is confident in its current policy stance but remains vigilant to potential risks. The emphasis on monitoring a wide range of economic indicators underscores the Federal Reserve’s commitment to being responsive to changing conditions.

  Market Expectations

  Market expectations and the Federal Reserve’s communication strategy also play a role in shaping the potential for lower interest rates. The Federal Reserve’s forward guidance and the signals it sends through its statements and speeches can influence market expectations and financial conditions. If the Federal Reserve signals a willingness to cut rates in response to deteriorating economic conditions or if market participants anticipate such a move, it could impact financial markets and the broader economy.

  The Federal Reserve’s statement on July 31, 2024, provides a comprehensive overview of the current economic conditions and the Federal Reserve’s policy stance. The decision to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent reflects a cautious approach as the Federal Reserve evaluates the impact of previous rate hikes and monitors progress toward its inflation target.

  The potential for lower interest rates in the coming months hinges on several factors, including the trajectory of inflation, economic growth, labor market conditions, financial conditions, global economic developments, and market expectations. While the Federal Reserve has indicated that it does not expect to reduce the target range until there is greater confidence that inflation is moving sustainably toward 2 percent, a significant slowdown in economic activity or adverse global developments could prompt a reassessment of this stance.

  Overall, the Federal Reserve’s commitment to achieving its dual mandate of maximum employment and stable prices means that it will remain vigilant and responsive to changing economic conditions. As such, the potential for lower interest rates cannot be ruled out entirely, but it will depend on a confluence of factors that influence the economic outlook and inflation dynamics.

  Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. 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

• Hot Market of the Week – September T-Bonds

Would you like to receive daily support & resistance levels?

Yes Select

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First Notice (FN), Last trading (LT) Days for the Week:

www.mrci.com 

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Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

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* 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.

Highly anticipated NFP (non farm payrolls) report tomorrow.

Volatility is quite high. This requires one to evaluate their stops? targets? Trading size?

With the micros Trading such good volume across the board a trader now has the option of trading one 3, 6 micros for example rather than trading one Single mini SP or mini Nasdaq This is especially true on volatility as as high as we have seen the last few days And may help certain traders adapt to the volatility.

If you like feedback, discuss ideas – let us know and we will do our best to assist.

NQ daily chart for your review below with possible support levels.

Daily Levels for August 2nd, 2024

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* 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.

Markets Post FOMC and Pre NFP

By Mark O’Brien, Senior Broker

General: 

In a lead-in to today’s FOMC rate decision, the Labor Department reported that U.S. labor costs increased moderately in the second quarter as private sector wages grew at the slowest pace in 3-1/2 years.  The report from the Labor Department this morning followed data last week showing inflation subsided considerably last quarter, with sub-3% readings in several measures.  Traders – and maybe Fed policymakers – viewed the reports as more evidence inflation is earnestly on a downward trend and could ready the Fed to bring down borrowing costs.

It wasn’t expected that Federal Reserve policymakers would adjust their benchmark interest rate at the conclusion of their two-day meeting today.  The economy remains resilient, but the fear of recession has not been completely overcome.  With that said, this meeting may be the last time the FOMC leaves rates on hold.

The markets now see a 90% chance of a twenty-five basis point rate cut in September, according to the CME FedWatch Tool.

While the U.S. central bank is inching toward a rate cut cycle, the Bank of Japan is moving in the opposite direction. Overnight, the BOJ raised its key short-term interest rate to 0.25%, the highest level since December 2008.  It also announced plans to cut its bond purchases in half until March 2026 to ensure market stability.  This comes after years of Japan’s negative interest rate policy that ended back in March.

Indexes:     

As of this typing, the September E-mini S&P 500 stock index futures contract climbed ±110 points (a ±$5,500 per contract move) / ±2%.  The September E-mini Nasdaq jumped over 600 points (a $12,000 per contract move) / ±3%.

Metals:  

Dec gold futures prices traded up ±$35.00 / oz. to ±2,487 / oz., its sixth highest close and within ±$20 of its all-time high on growing optimism the U.S. Federal Reserve will conduct an interest-rate cut in September.

General, P.S.: 

The next big scheduled event: this Friday’s monthly Non-farm payrolls report from the U.S. Labor Department. It’s widely considered one of the most important and influential measures of the U.S. economy.  To convey its findings, the Labor Dept.’s Bureau of Labor Statistics surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work sites (the report excludes farm workers, private and domestic household employees and non-profit organization employees).  The report also includes other detailed employment data including the overall unemployment rate – as a percentage of the total labor force that is unemployed but actively seeking work – wages, wage growth and average workday hours.  The report is released at 7:30 A.M., Central Time.  Economists polled expect non-farm payrolls to have increased by approximately 178,000 in July, just below June’s 206,000 gain and in line with the recent three-month average of 177,000.

Daily Levels for August 1st, 2024

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* 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.

Movers and shakers!

By John Thorpe, Senior Broker

Today’s News:

Redbook Weekly US Retail Sales Headline Recap

**Redbook Weekly US Retail Sales were +4.7% in the first three weeks of July 2024 vs July 2023

**Redbook Weekly US Retail Sales were +4.5% in the week ending July 27 vs yr ago week

Updated: July 30, 2024 8:00 am

Case Schiller 20 US Metro-Area Home Prices Recap

**Case Schiller 20 US metro area home prices for May Y/Y: +6.8% from the year ago month

**Case Schiller 20 US metro area home prices for May M/M: +0.3% vs prior month

Updated: July 30, 2024 12:52 pm

OPEC

A number of OPEC+ sources cited by various media outlets say the OPEC+ joint minister meeting committee Thursday will very likely not make any changes to the cartel’s production figures. Oil this week has traded lower on low Chinese demand concerns, and waning effects of geopolitical risks. OPEC is planning on gradually phasing out 2.2 mln bpd of previous cuts starting in October and ending in Sept 2025.

Trade sources Tuesday afternoon estimated commodity funds as net sellers of 11,000 Chicago corn futures and 2,500 Chicago wheat futures. Funds were also said to be net sellers of 7,000 soybean and 4,000 soymeal contracts.

Israeli public broadcaster said the targeted senior Hezbollah commander was killed in today’s strike by Israeli forces

Watch Tomorrow:

ADP, Pending Home Sales, Chicago PMI ,FOMC and FOMC Q @ A

Earnings Meta, Qualcomm. after the close.

Daily Levels for July 31st, 2024

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

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* 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.