Futures Trading January to February – Where are we headed?
The S&P500 is presently in a chop zone that is roughly 120 points in consolidation on the daily chart. The support came in at 1965 and has moved back and forth between there and the swing high. I have placed a fibonacci extension over the previous correction to the swing high to show possible price extensions. You might note the area from 2060 and the swing high to 2090 is where the market could consolidate and then spring board for the next targets around 2120, 2159 and 2220.
Futures trading January 2015 could see more quick short lived corrections than 2014.
You can probably see again how corrections are taking 4 to 7 days to move down and then 2-3 days to move up when it breaks out of consolidation. Presently, if price falls from this level, we could see a bit longer move down as we are in a Head and Shoulders Bearish pattern. Note that Head and Shoulders Bear patterns have not taken a full extension down for the past few years and that I would expect to see them quickly reverse.
Central Banks are moving the markets and creating a very volatile intra-day trading situation. Futures trading is an overnight market so Central Banks policy, intervention through Quantitative Easing and use of interest manipulation will first show up in the futures market. Be aware that some of these swings have been 20 to 40 handles (points) in the after hours only to be followed by volatile gaps, and intraday reversals covering 20 to 40 points.
Trading Gaps in 2015.
I have highlighted the open gaps on the chart above, you will see them as small rectangles showing where the previous days close and the next days open have not filled. Noting these as downside targets for sell offs. and of course the major psychological support of 1800. If we break under here watch for the bid to be pulled and maybe some free fall. Always remember that trading is risky, don’t trade unless you know what you are doing and have risk capital. Don’t trade with your rent money, that is gambling!
January 15, 2015 Los Angeles, California Financial Markets and a collision of Outliers
I am writing my Annual report for our proprietary fund ignoring this intuitive feeling that we are on the door step of a financial contagion. January has started out fast and furious in the world with combinations of terrorism, and financial decay moving into what the main stream media paints as a healthy American Market. In the shadow of this booming market for “Market Makers” we have watched the wealthy become super wealthy and the middle class almost disappear. I live in California, a place of eternal sunshine, wearing shorts in December- January, where a sort of eternal optimism pervades and entrepreneurial capital flows. Everyone that lives around me is either a upper division public servant (police, homeland security, fire chief) or an Entrepreneur working their own business. The jobs for the public sector have been booming, the entrepreneurs have been letting people go and working themselves. Most of my acquaintances who were anti gun this past year have purchased their first guns. It is surprising in the sheer numbers of my semi conservative semi liberal middle of the road acquaintances have made this their middle of the road. This is the environment I am watching spread through wealthy neighborhoods close to me. You can’t even get range time reserved for shooting practice. Prices for practice have gone up and times are booked weeks in advance.
I can’t ignore my intuition when it is driven through facts, this is for my friends and my students.
I talk to people around me and notice they are so complacent about the war we have been in, and the perilous heights the markets have reached from bonds to the S&P500. The complacent think it is all taken care of, they have funded their pensions, everything is going to be alright. Smart people have a “plan B”
This is the complacency when “Market Makers” take advantage of the under wealthy class through “out liers”. I will out line a few of these which have a larger gross effect on financial markets and what is making the hair on the back of my neck tingle.
Butterflies are coming to Europe
The financial butterfly effect or outlier (from Chaos Theory), is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state.
1. The Swiss have bailed on the Euro. When the swiss unhooked their currency from the Euro the market shifted, almost shuddered in every financial product I was watching. The truth is out. Watch out for Margin Calls.
When the Swiss unhooked their currency almost instantaneously the market moved 20% against the Euro. The sheer number of margin calls in derivatives, options and leveraged ETF’s must be huge. Will their be a 5 day grace period (liquidation period) or are we going to see this unwind in to the weekend. Some funds are leveraged at 50 – 200 to 1. The fall out from this could last months and cost the Euro community 100’s of billions of dollars.
Net effect on financial market is dangerous. Time and Transparency – the less transparency the more time it will take to unwind. “Market Maker” trick.
2. Russians are getting pissed at their economy. Oil is down 50%, the Ruble has lost its buying power and unemployment is skyrocketing.
Santions + Worthless Ruble + Oil cratering + 80% of people are concerned over food = Putin taking the off the ball with either “War” or “Aggression”
This outlier can unfold in many ways. With Pain coming from decreasing consumption from Europe in the form of Food, manufacturing and machine tooling from Germany coupled with financing from England….this is all changed.
The next step is in progress – retaliation and here is the start. Russia shifts Exporting Natural Gas to Europe for Turkey. This is Huge. Also the Petro Ruble which will be used instead of the Petro Dollar trade.
3. Gold is rebounding from it’s bottom. Gold is the “Catastrophe Hedge” and even with the strength of the dollar it is going higher.
Gold trading in the derivatives market is leveraged and highly volatile. Most traders can’t afford to hold large positions. Volume has been increasing on this move up and we are seeing “Scared Money” come in strong this past week. “Fear drives Gold prices” Joel Wissing
I have always been of the mind that if the economy collapses to the point where you are going to have to use gold or silver then you might invest in firearms too, because you will need them to keep your gold. That being said, getting an ounce of physical gold on the dips could be a good idea. Just be careful how you keep it. There are plenty of prep-per websites for ideas. Picking up an ounce or two could be part of your “plan B”
Most people are watching for Greece to go, but like Lehmans, there are plenty of banks that could collapse, over leveraged financial institutions that have margin calls or even clients shifting assets. UBS richest clients just did a shift to the dollar.
I am not saying the dollar is a safe bet, but for now in the quagmire of financial reality(sh*t), it is going to be the last man standing if we collapse tomorrow.
Pressure on the Euro is coming from everywhere and this insurgency of clashing cultures is not dissipating it is accelarating. Plan B – hold a credit card or bank account in another country in a different currency, and hold another passport. Not everything unless you are the richest man in China he moved it to multiple currencies in the Cayman Islands.
5. US Markets could be reversing. Markets do not move rationally, as you can see with oil, the Swiss Franc, the Euro and more…..
The US is at a crucial juncture with many outside pressures that could correct the markets. A correction is normally 10%, but the problem is that there is so much complacency in the market that if a “Market Maker Sell” hits and no on is on the other side to buy, then the market can go into free fall. There are protections, but they can be short lived as more people after seeing the government “halt trading” have a tendency to panic and sell when the market opens.
The three small blue lines are unfilled gaps where the market has a tendency to come back and fill. These are down side targets on the chart. We have entered a choppy zone where the traders are indecisive and there could be many bounces back and forth until direction is found and the “Market Makers” Choose a direction.
“Plan B” Be able to short the market, Falling markets are where fortunes are made. Educate yourself and become financially literate.
Will it happen today? Will the market crash tomorrow? Will it crash in our sleep? I don’t know when or how but I do know to keep my eyes open to direction, stop listening to the talking heads. Read, investigate and find the ways to create your “Plan B”
There is a lot going on in the world and the main stream media is keeping most people fed with a mixture of fear “Ebola” and fixation “princes, religion, the web” . I am very fortunate that I have people around me that have educated me in economics, business and the way of the “Market Makers”. You too can take responsibility for yourself by starting a “Plan B” and gradually implementing it, step by step, to secure yourself and family and focus on your passions. It is the only way out.
For more on 2015 market prediction see this article especially on Central Banks and market volatility with currency.
Does America winning the Currency war?
Even if I don’t like this statement…. I have to give credit to USA and they strong dollars. If there’s one thing I can say where’s United State are good at , it’s in the manipulation of they dollars, and they deserve it, after all effort they put to become a world currency.
The simple reason why I still give United States the “world power”, is simply because they control the world money, by being the world currency. I think in they case, they don’t really need to own gold, as others country…since the man who control the price, can buy anything right? You can have all gold you can find, it doesn’t mean you are rich, if gold doesn’t worth anything.
Few weeks ago, I was thinking by touching the red down trend line at 89$, dollars will go down and gold up….I was wrong. Since it did not happen, I start to look for the next turning point, witch will be at the “orange line”. at 96-97$ on this chart.
The fat red line, represent very strong resistance, if silver go below this trend line, the next ressitance will be at about 9$ and then 5$/oz
I’m sure people think I’m crazy to see Silver that low…and saying this is impossible… but not long time ago, when silver was at 25-20$…many people was also seeing im crazy to see silver drop at 15$ price range.
By being in a pennant..we should see the next long term direction very soon.
For Gold Price target and direction, see past Blog post, by Joel Wissing.
Since I know some people who are looking to buy Natural Gaz right now because they think it’s over sold. I decide to get this chart , where they could see in a very long term the Natural gaz price movement.
If you analyse properly…you will understand, that see Natural Gaz at 3.3$ is not a big deal so far.. and the bottom price , it’s at about 2.2$, when it touche the Green Trend line ( bull Trend)
Oh Ya ! let’s go back on US Dollars , Oil, Gold and Silver….next movement…
You have to understand…the reason why US Dollars keep moving Up, it’s because oil price get cheaper and cheaper. And everyone know the reason it’s because of OPEC ( created by United State with the Petro-Dollars) who are doping Oil price on purpose, to please USA… And knowing Arabic Saudi are loosing a lot of money right now, true cheap oil… the day they will decide to bring the Oil price back to the tops, USA will start to loose the currency war… The key question it’s if it will happen soon enough, before we see gold and Silver, going so low, so it won’t go back any time soon to create new all time highs.
They important think to understand is :
- When US Dollars going UP, Gold and Silver price going Down.
- To change Gold and Silver price, to go Up again, you need to change US dollars, present momentum.
- to change US Dollars Momentum,( go down), you need to change the cause of US Dollars going Up, witch it’s OPEC decision to bring the Oil Price down on purpose.
Two know what to do… Watch OPEC release news
Crude oil is testing a strong Bullish Trend ( green line). And it’s why we can see Oil price stop at 50-55$. We could see it go back to 80-82$, and then retest the Bullish trend line. This will give a break for pretty much every country who export oil.
If ever they succeed to break 50-55$ range, this will be catastrophic for everyone, are a world recession may start. And the bottom price will be at 40$
If…again , we break the 40, next price range will be 40-20 and this is very bad, since it can stay in this range for very long time.
But since it’s the OPEC who control the Crude Oil price, and it’s more a political game between Russia, USA, and Arab Saudi ( witch are loosing a lot’s of money right now in this game)…I really don’t think anyone will consider to drop Oil under 40$..