When it comes to finance, monetary policy is the quintessential market driver. No matter what you’re trading?equities, futures, bonds, or currencies?evolving monetary policy has a tremendous bearing on asset valuations. Perhaps the most influential policymaker in the world is the U.S. Federal Reserve (FED). Let’s take a look at the CME FedWatch Index and how traders use it to account for future FED policy decisions. What Is FED Policy? So what exactly is monetary policy? It’s the action taken by a nation’s central bank to promote pricing stability and long-term economic growth. For the United States, the lead policymaking body is the Federal Open Market Committee (FOMC). The FOMC consists of five Reserve Bank presidents and the seven members of the FED’s Board of Governors. … [Read More...]
Valuation puzzle
Equities are expensive. It’s difficult to argue against this. But does this also mean that markets will fall sharply? Assuming that there are plenty of other factors that could drag equity prices lower, the high valuation alone is probably not enough reason for a new market correction. Granted, the price-earnings ratio is high, in some cases even historically high. The Shiller PE, which looks at corporate earnings development over the last ten years, is over 30 in the US, which happens rarely. And the graph shows that Warren Buffett’s favorite valuation indicator – total market capitalization as a percentage of GDP – also indicates historically high equity valuations. Correction looming? Are the high equity valuations the harbinger of a correction? Given the high degree of … [Read More...]
Trading Strategies in the Next Global Economic Downturn
This year has been a pivotal year in finance, with markets around the world exhibiting rare and extreme volatilities. The catalyst behind the turbulence was a true Black Swan event: the novel coronavirus (COVID-19) pandemic that made a major global economic downturn appear inevitable. Let’s take a look at a few safe-haven trading strategies that savvy traders are using amid the tumult of 2020. Safe Havens and the COVID-19 Recession COVID-19 broke onto the global stage in mid-February 2020. At the time, leading U.S. equities indices were pushing record highs, American unemployment was near historic lows, and economic growth was stable. Following 90 days of unprecedented lockdowns, quarantines, and travel bans, the promise of 2020 quickly devolved into panic. Amid the pandemic’s early stages, most financial authorities … [Read More...]
Is Crude Oil in a Long-Term Bear Market?
The first three and a half years of Donald J. Trump’s presidency proved active for the global oil complex. Featuring atypical market drivers—including a hot U.S.-China trade war, a fierce Saudi Arabia-Russia price war, and an unprecedented global pandemic—oil prices were all over the map. The only thing that didn’t factor into the dynamic was the most traditional energy market driver of all: military conflict. From the fall of 2018 to the summer of 2020, West Texas Intermediate (WTI) futures traded in a historic range. October 2018 featured highs that eclipsed $75.00 per barrel. By April 2020, however, prices crashed to an all-time low of -$40.32 per barrel. As we move into late 2020 and beyond, traders may wonder whether WTI will revert back to 2018’s form or … [Read More...]
Turner’s Take Podcast | How Much Corn In Iowa Is Lost?
Play Turner’s Take Podcast Episode 244 If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! New Podcast In our latest podcast we go over the inflation trade and why we like gold (standard and micro contracts). We talk about ideas for crude oil as it trades in a tight range. Then we move onto the corn, soybean, and wheat markets. Finally we take a peak on our initial thoughts for 2021-22 corn and soybeans. Make sure you take a listen to this week’s Turner’s Take. If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free! You may also click here to register for… [Read More...]
Trade Spotlight: Futures – Weekly Summary: Soybeans, Wheat
This is the Weekly Summary Email of the Trade Spotlight advisory service for the week ending on Friday, August 14, 2020. Open Positions Long the November 2020 Soybean contract from 878’0 (8/11/20). Marketed settled at 898’6. Marked-to-market profit of $1,037.50. Working Orders Sell stop for the November 2020 Soybeans contract at 888’0, below the 20-day Moving Average, GTC. (Profit: $500, plus including commission and fees) Sell limit for the November 2020 Soybeans contract at 903’0, a potential resistance level. (Reward: $1,250, minus commission and fees) Sell the December 2020 Chicago Wheat at 524’0 using a limit order, GTC. If filled: Place buy stop on 535’0, above the 20-day Moving Average, GTC. (Risk: $550, plus including commission and fees) Place buy limit on 480’0, above the twelve-month contract low (Reward: … [Read More...]
Trading Small Cap Stocks with E-Mini Russell 2000 Futures
If you’re interested in maximizing risk and reward, look no further than the Russell 2000 index. Comprising equity offerings nicknamed the “small caps,” this asset class features the utmost in growth potential for the U.S. equities markets. If you’re an aspiring futures market gunslinger, Micro E-mini and E-mini Russell 2000 futures listed on the Chicago Mercantile Exchange (CME) may be just the markets for you. What Is the Russell 2000? By definition, a small cap stock is one with an aggregate market capitalization that falls between US$250 million and US$2 billion. Accordingly, the Russell 2000 features the lower 2,000 offerings of the broader Russell 3000 index?the crème de la crème of American small caps. The beauty of the Russell 2000 is that it provides maximum exposure to the growth potential … [Read More...]
Panic Trading 101: Technical Reliance for Unclear Trading Fundamentals
Panic! Simply mentioning the word strikes fear into the hearts of most conventional buy-and-hold investors. But, for active futures traders, panic equals opportunity. And, for astute traders, panic is profitability. So what is a market panic? In general terms, a panic is defined as “a sudden overwhelming fear, with or without cause, that produces hysterical or irrational behavior.” During a market panic, many traders and investors are the ones behaving hysterically or irrationally. Textbook market panics occurred in 1929, 1987, 2008, and spring of 2020. All were shocking crashes, featuring periods of intense rebound. When it comes to trading fundamentals, panic is both risk and reward. Let’s take a look at how technical analysis can be an invaluable part of your approach to seemingly chaotic markets. When All … [Read More...]
Futures to Trade Equity Market Pullbacks
By definition, a pullback is a contradictory move in price from a periodic extreme. Pullbacks may be bullish or bearish in nature, often creating premium opportunities to trade futures when they occur. If you’re interested in trend-following strategies, then understanding pullbacks is a great place to begin. Step Up and “Buy the Dip” Throughout the past three-plus years in U.S. equities, the phrase “buy the dip” has been worn out. In fact, if you’ve ever spent a morning watching CNBC or the Fox Business Network, the expression is likely old hat. But what does it really mean to “buy the dip”? Essentially, to buy the dip is to take a new long position on price falling from a periodic high. Assume that the S&… [Read More...]
Precious Metals: ETFs vs Futures
Gold is hanging around its most expensive prices since futures on the commodity started trading almost half a century ago in 1974. While the price levels have increased, the action around gold has not. Volatility has only risen slightly in gold products, and it is in fact still below its historical average. As gold feels out new highs in a more calculated manner, its metallic companion silver has almost doubled in volatility. Source: dxFeed Index Services (https://indexit.dxfeed.com) Whether it’s by price extremes or large moves, the curiosity of many stock traders is piqued. But those familiar with stocks may have a hard time finding the right precious metal product to speculate on since the choices vary widely in exposure, size, and look. Metals or Mining … [Read More...]
2020’s 5 Hottest Trading Markets
This has been a historic year in the capital markets, headlined by the novel coronavirus (COVID-19) pandemic. A true black swan event, the COVID-19 outbreak injected unprecedented uncertainty into the world’s financial system. If you’ve been active in the markets since Jan. 1, then you’re hip to the huge volatility and volumes of 2020. So what are the five hottest trading markets for 2020? Let’s take a look at the top futures contracts from the equity, currency, and commodity asset classes. 1. E-mini S&P 500 A staple of the equity index offerings from the Chicago Mercantile Exchange (CME), the E-mini S&P 500 (ES) has been on fire throughout the coronavirus contagion. Beginning in late February, this market has witnessed several historic sell-offs, epic volatility, and a robust … [Read More...]
Turner’s Take Podcast | Corn and Soybean Seasonality
Play Turner’s Take Podcast Episode 241 If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! New Podcast In this podcast we go over the effect US stimulus has over the US Dollar, metals, and the stock market. We then turn our attention to the seasonality of corn and soybeans during August. We also talk about the Corn vs Wheat futures spread. To hear our ideas on the equities, metals, and grain markets, make sure you take a listen to the latest Turner’s Take Podcast! If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free! You may also click here to register for Turner&#… [Read More...]
Capitalizing on Equity Market Volatility with Micro E-Minis
Listed on the Chicago Mercantile Exchange (CME), the Micro E-minis provide active futures traders with unparalleled equities market flexibility. Facing the premier U.S. indices, this group of products allows for the direct engagement of large, medium, and small-cap stocks. During the 2020 novel coronavirus (COVID-19) pandemic, equity index futures became exceedingly popular contracts. Beginning in late February, the world’s capital markets attempted to “price-in” the contagion’s implications, creating extreme trading conditions in the process. While many market participants fled from the enhanced volatilities, some found unprecedented opportunities in CME Micro E-mini futures. Storm Clouds on the Horizon Decades from now, historians will look at Monday, Feb. 24 and Tuesday, Feb. 25 as being the kickoff of the COVID-19 market panic of 2020. One can argue … [Read More...]
Turner’s Take Podcast | Corn Game Plan
Play Turner’s Take Podcast Episode 240 If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! New Podcast In this week’s podcast we go over our thoughts on the macro markets and then we dive into our game plan for corn between now and October. We see corn drifting lower until first notice day. Seasonally corn finds support between the end of August and mid September. The post harvest rally can happen during the end of Sept through October. If you want to hear what we are thinking and how we will trade it, make sure you take a list to Turner’s Take Podcast! If you are not a subscriber to Turner’s Take Newsletter then text… [Read More...]
Beyond the Spotlight: July 20, 2020 (Crude, OJ, Copper )
Beyond the Spotlight is a weekly video released on Mondays that spotlights two or three markets that may become trading opportunities for the week ahead. This enables you as a subscriber of the Trade Spotlight advisory service to look ahead with us, while potentially creating additional trading opportunities for yourself. The week’s video linked below covers three markets: Crude Oil, Orange Juice, and Copper. Beyond the Spotlight for the Week of July 20, 2020 Try Trade Spotlight Suite – for 3 Months Trade Spotlight Suite – Trial – The Trade Spotlight advisory service consists of three segments covering futures, futures spreads, and commodity options. At the end of each trading day the commodity markets are analyzed by applying our methodology and recommendations are delivered to you based on our … [Read More...]
Trade Spotlight: Futures – Weekly Summary: Cattle, OJ
This is the Weekly Summary Email of the Trade Spotlight advisory service for the week ending on Friday, July 17, 2020. Open Positions Long the August 2020 Live Cattle on 98.400 (7/02/20). Marked settled at 103.275. Marked-to-market profit of $1,950. Working Orders Sell stop for the Live Cattle contract at 101.200, below the 50% Fibonacci Retracement, GTC. (Profit: $1,120 plus including commission and fees) Sell limit for the Live Cattle contract at 108.000, a potential resistance level, GTC. (Reward: $3,840 minus including commission and fees) Closed Positions Stopped into the September 2020 Orange Juice contract at 120.950 and stopped out in the same trading session (7/19/20) on 125.65 for a loss $705. Step into the “Spotlight” Send questions specific to current or past trade recommendations, or any commodity related questions to tradespotlight@danielstrading.com. … [Read More...]
Top 3 Advantages of Trading E-mini NASDAQ Futures
For more than two decades, technology has been a key player in the world of finance. From the dot-com crash of the early 2000s to the meteoric rise of FAANG stocks, big tech is never far from Wall Street’s collective psyche. This year has reminded us of the sector’s importance: As COVID-19 decimates markets in 2020, tech values are outperforming those of almost all traditional industrial titans. E-mini NASDAQ futures furnish active traders with the leverage, liquidity, and volatility that have made derivatives famous. In addition to these key benefits, this contract provides traders three primary advantages for navigating the contemporary marketplace. hbspt.cta.load(2022783, ‘d5032fad-2cb7-4408-8482-95fe01076ace’, {}); 1. Technology Focus Established in 1971, the National Association of Securities Dealers Automated Quotation System (NASDAQ) is … [Read More...]
Alternative Measures of the Same Stock Market
Those new to the equity space might think of the “stock market” as a singular entity that summarizes the state of all public companies, whereas more experienced traders will clarify that the current state of stocks depends on the index you subscribe to. This idea is especially relevant now, as the Nasdaq rests near all-time highs and other indices such as the Small Stocks 75 (SM75), S&P 500, and Dow Jones fight to reach unchanged on the year. How could this be? Well, for one thing, the Nasdaq and Small Stocks 75 do not hold all the same stocks – the Nasdaq favors technology stocks while this sector is only one of five diversified sectors in /SM75 – the futures on the Small Stocks 75 index. More significant, … [Read More...]
Turner’s Take Podcast: COVID Vaccine Progress | Rumors of China Buying US SRW Wheat
Play Turner’s Take Podcast Episode 239 If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! New Podcast In this week’s podcast we talk Moderna’s positive vaccine test results and how that could effect the markets later this year and into 2021. We also talk about the grain markets and what to make of the rumors of China buying SRW Wheat from the US. We wrap up the podcast by reviewing some of our positions in the livestock market. Make sure you take a list to Turner’s Take Podcast! If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free! You may also click… [Read More...]
What’s Moving in Precious Metals
Gold is flirting with its most expensive prices since August 2011, and it’s doing so in a historically unique manner. Other precious metals such as silver and platinum are less than half the price they were at the time of gold’s previous high, and many stocks have bounced back to approach or in some cases exceed all-time highs of earlier this year. Divergences Among Precious Metals Silver and platinum both boast high positive correlations to gold and have moved higher with it in recent trade, but neither metal is seeing anywhere near as much success as this outperforming precious metal. Gold is up close to 20% year-to-date, while silver and platinum are approximately up 5% and down 10% on the year, respectively. Source: dxFeed Index … [Read More...]
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