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Cmefutures

Is USD rebounding or reversing?Thanks to a strong January employment report, the greenback made an impressive comeback from the weakness since Q4. Someone might expect the strength could persist and even test 2022’s high, but I regard this as a rebound and the dollar will likely trade in a range between 100 to 108 (Dollar Index basis) in 1H 2023. First of all, the strength of greenback last year mainly came from an aggressive rate hike by Federal Reserve that kept the bond yield evaluated and widened the yield differential. As the chart shown, the yield differential of 2-year bond between US and German kept widening since 2H 2021 and reached the peak at Q3 2022. In the meantime, the dollar was on the uptrend against euro and other major currencies. When there was expectation the Fed will slow the hike pace, and ECB was becoming more hawkish to tackle inflation, the yield differential narrowed since Q4 that caused the weakness of dollar. After the FOMC meeting and before the employment report, the market downplayed the need for Federal Reserve to hike rate and even expected a rate cut by the end of this year in response to possible recession, turned a deaf ear to what J. Powell was delivering. Disinflation he mentioned is a term describing the inflation is dropping, which is nothing new that we can see from the inflation data (Benchmark, Core or PCE) in the last few months, and didn’t mean the inflation have dropped to the target level. His remark on 7 Feb about rate could be hiked to a level higher than market expectation showed there are more works Federal Reserve need to do. The strong employment report reminded investor inflation is still a major risk to the economy and the Federal Reserve might need to hike further to contain inflation. Market’s expectation on the “terminal rate” revised upward and the bond yield moved higher that contributed to the rebound of the greenback in the last few days. There are many factors affecting the movement in FX market, but the yield differential seems having a dominant effect in the last few quarters and could be the factors to watch in 1H 2023. I keep my conviction the Fed Funds rate will peak at 5.00% (lower band), which mean two more 25bp hike is coming. However, the hiking pace of ECB is even more hawkish and a 50bp rise is expected in their next meeting, and more could follow after. The higher and stubborn inflation in eurozone could make ECB keep hiking rate even if Fed paused, that might translate to narrower yield differential that is not positive to the greenback. Another interesting area to note is the yield of US 2-year note. The inversion of yield curve is implying a recession, but what if US can avoid recession, especially when the US job market is surprisingly impressive? Assuming US will not have recession, the yield spread between 2-year and 10-year bond should narrow, then how will they move respectively? A normal yield curve is 10-year yield higher than 2-year yield, while I don’t think 10-year yield will have the potential to rise to 4.5% or higher due to disinflation and technical reason, there is not much room for 2-year yield to rise further and even has a potential to retreat. A lower 2-year yield will lower the yield differential against other major currencies, that is negative to the USD. Even US 2-year yield revisit last Nov’s high, the German 2-year yield have risen 50bp from that level already. Since the rebound of the greenback released some overbought pressure and created a better entry point, you might consider a long position on EUR(6E) now, a short-term (1M) target at 1.1000 and a longer-term (1H) target at 1.1500. Stop loss could be set at 1.0500. If you disagree with me and believe the greenback in a reversal mode, you might consider a short position in gold since it could face further pressure after recent correction since it still accumulated meaningful gain in the last few months. Disclaimers Above information are for illustration only and there is no guarantee on the accuracy of the information. They should not be treated as investment recommendations or advices. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CME:6E1!Short
by FOTrading
Bitcoin CME Report for Tuesday 17 Jan 2023 to Tuesday 24 Jan 202CME Overview: Bitcoin and crypto, in general, have had a major run starting most significantly since the start of the new year. BTC1! Is the Bitcoin Chicago Mercantile Exchange Futures trading and comprises significant institutional trading of Bitcoin. The most significant data we use in this report are from the Dealer and Intermediaries which are the Exchanges and Brokerages as well as the Asset Managers the latter of which has been longing the 2021 all-time high and subsequent bear market to their peril. The report that comes out on Fridays shows the actions that occurred by position from the previous Tuesday to the Tuesday before that. This current report shows a week-long snapshot of CME positions on Bitcoin from Tuesday the 17th of January to Tuesday the 24th of January. New reports are released on the following Friday after the market closes. Bitcoin CME Report for Tuesday 17 Jan 2023 to Tuesday 24 Jan 2023 From the 17th to the 20th of January price increased from $21.2k to $22.4k before a 2-day break for the weekend. Most notably from Monday the 23rd and Tuesday the 24th the CME gapped up, meaning that the close price from Friday (CME closes for weekend trading) the price of Bitcoin increased from $22.4k and opened on Monday at $22.6k. This creates a “Gap”, and by rule, gaps do not have to be filled however probability says they have a higher fill rate than not. That weekend gap has now been taken out completely however a gap from the 14th and 15th of January largely still exists between $19.9k and $20.4k with a massive and older gap from the 12th and 13th of June 2022 above us at $27.4k and $29.1k. Dealers and Intermediaries are Extremely Short Short Positions: In the current reporting period, we see that Dealers and Intermediaries (The Exchanges / Brokerages) increased their longs by 101 positions bringing their total long positions to 304 while still adding 726 short positions bringing their total short positions to 4,346. This is very different from what usually occurs in relation to lower timeframe price action as we see Dealers and Intermediaries usually adjusting their positions more regularly to catch the Major Moves. As the price has increased in this period this is the most significant adding of short positions by the Dealers and Intermediaries that we have seen since the end of March 2022 when Dealers and Intermediaries massively shorted to force a Q2 open underneath the Q1 open and thereby wrecking quarterly options. Dealers and Intermediaries are now 93.4% short. Asset Managers are still largely out of Position and Entirely Long Long Positions: The other interesting figure from a more accurate perspective is how out of position the Asset Managers have been in the last year plus as they began heavily building longs at the highs in the fall of 2021 and now they have begun to heavily increase their positions in this weeklong period by a further 644 positions to a total of 7,671 long positions and closed 243 short positions leaving only 63 short positions total for asset managers. This means that compared to short positions Asset Managers and Institutions are 99.2% Long with relatively zero shorts. Summary This most recent COT report is interesting as it shows Asset Managers and Institutionals are only long at the same time as we have had good market movement to the upside with each level creating support. The Asset Managers and Institutionals are entirely in Long positions as they added massive longs that are/were out of position going back to November of 2021 and throughout the 2022 bear market. Bitcoin is still holding key levels however, the extreme bearish sentiment is starting to dissipate as Bears are being and have been punished in every range and consolidation period. Every continuous move-up was met by heavy shorting from retail thus providing more liquidity to move price upwards. This is now starting to change as Retail is beginning to add longs in this previous weekly range while shorts were squeezed out of position on Wednesday. The gap down at $19.9k to $20.4k is still in place and breaking any significant structure above still allows the market to capitalize on taking out later longs that got into position over $20k which have yet to be punished. The upside move is still in play until support is broken, a new gap that could be formed come the Monday open on Jan 30th would potentially provide an incentive for market movement as we open the week. Late Longs have not been significantly punished as heavier liquidity is building below us. That being said the weekend trading can decide quite a bit if we start closing 4hr or daily levels below the Weekly Open at $22.6k. The confirmed loss of this level will potentially allow us to short higher up and at the failure of the structure. Shorts have also already been punished and Longs have been by all accounts allowed to keep positions as heavy support still exists. All eyes are on the FOMC interest rate decision on Wednesday the 1st of February, with the forecast being an increase of .25% from 4.5% to 4.75% which should be a catalyst to move the market should the forecast not meet the decision. Retail is starting to flip their bias long just as the Asset Managers have both of whom have been largely on the wrong side of the market for well over a year. Conversely, the Dealers and Intermediaries have been largely correct in their positions and their massive adding of shorts in this area which should not be taken lightly as they have been right throughout the bear market. Our thoughts about the Dealers and Intermediaries are simple, don’t bet against them, they have all the data and see all the positions.
CME:BTC1!
by TrendmasterOfficial
Narrow Focus Delivers Greater ImpactFamous American Author Alfred Paul Ries once said, “Good things happen when you narrow your focus”. Global macro conditions and monetary environment could make that quote apt for US equity market investing too. Given the backdrop of price behavior, this case study argues that a spread trade comprising of Long Dow Jones Index and short S&P 500 index provides a potential reward to risk of 1.01. The charts above clearly point to the strong performance in Dow Jones Industrial Average Index (DJIA Index, a narrow market index comprising of 30 stocks) relative to the broader S&P 500 index (an index of 500 stocks). SECTOR WEIGHTINGS Based on sector weights as published by S&P Global on 31/Oct, the table below sets out the comparative analysis of the two indices. Information Technology - DJIA: 19.5%, SPX: 26.3%, Difference: -6.8%, DJIA Significantly Underweight Information Technology Health Care - DJIA: 22.2%, SPX: 15.3%, Difference: +6.9%, DJIA Significantly overweight Healthcare Financials - DJIA: 16.2%, SPX: 11.4%, Difference: +4.8%, DJIA Overweight Financials Consumer Discretionary - DJIA: 13.3%, SPX: 10.9%, Difference: +2.4%, DJIA Overweight Consumer Discretionary Industrials - DJIA: 13.9%, SPX: 8.3%, Difference: +5.6%, DJIA Significantly Overweight Industrials Communication Services - DJIA: 2.9%, SPX: 7.5%, Difference: -4.6%, DJIA Underweight Communication Services Consumer Staples - DJIA: 7.5%, SPX: 6.9%, Difference: +0.6%, DJIA Overweight Consumer Staples Energy - DJIA: 3.6%, SPX: 5.4%, Difference: -1.8%, DJIA Underweight Energy Utilities - DJIA: 0%, SPX: 3%, Difference: -3%, DJIA Underweight Utilities Real Estate - DJIA: 0%, SPX: 2.6%, Difference: -2.6%, DJIA Underweight Real Estate Materials - DJIA: 0.9%, SPX: 2.5%, Difference: -1.6%, DJIA Underweight Materials The DJIA has heavier weightage to Health Care, Financials, Consumer Discretionary, Industrials and Consumer Staples with underweight on Technology, Telecommunications, Utilities and Real Estate sectors. We live in times of unprecedented pace of monetary conditions tightening with high interest-rate expected right through 2023 until policy pivots creating fears of looming recession and continuing geo-political conflicts. Against such a backdrop, historically Financials and defensive sectors such as Consumer Staples, Industrials, and Health Care have outperformed rate-sensitive and growth sectors such as Technology, Real Estate and Telecommunications. TECHNICAL ANALYSIS The CME Micro E-mini Dow Jones Industrial Average Index futures ( MYMZ2022 ) completed a golden crossover (10d & 200d MA) on 9/Nov. A golden crossover is generally seen as a bullish signal of an uptrend. Furthermore, the MYMZ2022 closed above the R1 for the pivot indicator on 25/Nov. If this level holds, this price point could act as a support level. RSI for MYMZ2022 exhibits an overbought market condition with RSI at 71.25 as of closing 25/Nov. The stochastic indicator also points to the market having overbought with a reading of 97.74. Notably, the stochastic indicator displayed an intersection on 8/Nov which points to a potential reversal in the uptrend. Meanwhile, the MESZ2022 is currently trading below the long-term (200-day) moving average and has not had a golden crossover yet. MESZ2022 also failed to breach R1 of the standard pivot twice and closed below it on 25/Nov. The pivot R1 and the long-term moving average both point to strong resistance at this level. RSI was 61.86 as of 25/Nov. The stochastic indicator shows that MESZ2022 is overbought with a reading of 94.16. Notably, the stochastic indicator displayed an intersection with the 3-day SMA signaling a potential reversal in the uptrend. According to Goldman Sach’s 2023 Equities Outlook, they expect equities to cool off from their current rally in 2023. This is supported by historical performance during similar economic conditions. Moreover, both DJIA and S&P500’s technical signals also point to them being overbought. This could mean a correction is due for both of them. However, the DJI stands on a much stronger footing, technically, as it finds support at the long-term MA that it intersected this month. As such, the Dow is expected to be more resilient than the S&P 500 during the impending correction. COMMITMENT OF TRADERS’ REPORT According to CME’s Commitment of Traders (COT) report, S&P 500 traders have established net long positions. Dealers had long OI of 17.4% compared to short OI of 16.1%. Asset Managers and institutional investors had a long OI of 40.3% compared to 22.1% short. By contrast, Dow futures had dealer/intermediary long OI of 35.3% compared to 16.3% short. While institutions were 22.3% long compared to 8.9% short. Notably, leveraged positions for S&P 500 had 26.6% short OI against 6.5% long while DJI had a roughly balanced 22.3% for long and 21.4% for short. Charting DJIA/SPX shows that the ratio rallied in October and broke through all the resistances for the pivot indicator. November saw the ratio cool off. Both RSI and Stochastic indicator cooled off during this and currently stands neutral. The stochastic indicator recently displayed a crossover which could indicate a reversal in the downtrend. If the ascending channel highlighted below maintains, then a DJIA and SPX spread trade would be viable over the next few months. Take profit could be set as R1 and R2 of the pivot indicator. Stop loss could be set at the Pivot point. In the chart these levels have been adjusted by accounting for the 20-day historical volatility. IF HISTORY IS ANY GUIDE Analysing the ratio over the long-time frame we can see that the rally over the past month is not unexpected. The DJI/SPX ratio rallied during past instances of Quantitative Tightening as well. For instance, during 2018-19, with tightening monetary conditions, the ratio rallied to 9.363 compared to a low of 8.233 in 2016. The ratio also spiked after the tightening in 2006-08 from a low of 8.447 to a high of 10.075. Also in 2000-01, from a low of 6.984 to 9.691. Considering that the Fed has hiked rates in an aggressive manner this time around, the rapid rise in this ratio is also not unexpected. From past data, we can see that the ratio does not peak until the peak of the hiking cycle or a few months after that. From Fed statements we can see that although the pace of hikes is expected to slow, a pivot is not expected anytime soon. TRADE SET UP To establish market neutral spread trade at inception, a ratio of 7:6 lots (DJI:SPX) is required with a long position on 7 lots of DJI and a short position on 6 lots of SPX. The ratio of 7:6 ensures that the exposure to DJI and SPX is neutral with equivalent notional on each position. As such, 7 lots of Micro E-mini Dow Jones Average Futures March Expiry ( MYMH3 ) will be required which have a required margin of $750 each for a total of $5,250. Each contract of MYMH3 provides exposure to $0.5 x Dow Jones Index. Six (6) lots of Micro E-mini S&P 500 Futures March Expiry ( MESH3 ) will be required which have a required margin of $750 each for a total of $6,360. Each contract of MESH3 provides exposure to $5 x S&P 500 Index. After factoring in margin credits, the anticipated total margin required for this trade is $12,000. The total notional for the trade would $120,000 SPX spread against $119,689 on DJI based on prices as of closing on 25/Nov. This case study suggests entering the spread trade at the current DJI/SPX ratio of 8.522 with a target ratio of 8.671. This would yield profit of $2,140. Where the trade is held to second target of 8.806 it would yield a profit of $4,054. In case the trade goes sour and the ratio contracts, we would exit the trade at the level of 8.236 which would result in a loss of $4,026. This leads to a reward to risk ratio of 0.53 for the first target and 1.01 for the second target. SPREAD TRADE MARGIN CME offers margin credits for spread trades. Clearing brokers might charge differently from the Exchange imposed margins. MARKET DATA CME Real-time Market Data help identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or particular needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of the future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
CME_MINI:MES1!
by mintdotfinance
BTC In A Corrective Pullback: Intraday Elliott Wave AnalysisBitcoin made sharp reversal and strong recovery last week, which we see it as a five-wave bullish impulse from Elliott wave perspective. With recent sharp decline into wave (a), followed by current recovery in wave (b), there's a chance for another wave (c) drop to complete a higher degree wave "iv" correction. Ideal support comes around 20.000 level that can also fill the BTC CME Futures Monday's GAP before the uptrend for wave "v" resumes ahead of the weekend. Happy trading!
CME:BTC1!
by ew-forecast
7
Short-term trading beat long-termWhy short-term trading into the US market beats the long-term investing in the year 2023? As much as the Fed wanted to dial down the interest hike for the rest of the coming meetings, but they have limited control. It all depends on the forthcoming data, especially the CPI and the employment numbers. If these data continue to have a higher number, the Fed may not have a choice, but to resume back to its massive rate hike. There are 4 types of investor or traders, they are: 1. Long term investor 2. Short term investor 3. Short term trader 4. Intra-day trader Greater volatility is expected in 2023 and why the 2,3, and 4 may works better in 2023. This is what we will be discussing today: Content: • Investing types & its time-frame • Short-term trading strategy CME Micro E-Mini S&P Futures Minimum fluctuation 0.25 point = $1.25 1 point = $5 10 points = $50 100 points = $100 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:MES1!Short
by konhow
2
Bitcoin - All gaps that need to be filled (must see) I always provide you with very interesting ideas on Bitcoin and other altcoins. This time, we will take a look at all visible and invisible gaps. The first chart is from Binance SPOT and the second chart is from CME Futures. You know that phrase: "All gaps need to be filled." Is it true or not? Let me know in the comment section right now! As you can see, there are two gaps on the CME futures chart, and there is a good chance that these gaps will be filled soon. Better now than in the next two years. I am not going to lie, but we can start a new bull market after that. This bear market is the steepest and strongest in the history of Bitcoin. There are no pullbacks and the price is basically free falling. I love gaps, because from my experience, there is always a strong reaction exactly at the end or at the start of the gap. What is a visible gap? The visible gap is clearly a standard gap because the open price of the candle is much higher than the close of the previous candle. There is no price action, and there is a space between these candles. It's very visible to everyone. What is an invisible gap? Usually, when the price drops significantly, a gap between the candles is created. And if there is no retest of the previous drop, the gap remains unfilled. These gaps tend to be filled as well. BTCUSDT is traded 24/7, so standard gaps are not possible. Happy trading! Let's take a closer look at the few CME futures gaps: 1) Bullish gap - 9665 2) Bullish gap - 11205 3) Bearish gap - 28740
Short
by UnknownUnicorn2537518
90
Where are commodities heading to? Beyond 2022Where are the meat or commodity prices heading? Meat prices have been rising at a rate of about 3% per annual over the last 40 years. Meat is what I classified as an edible commodity, so is corn, wheat and rice. And as these commodities start picking up in prices, they are the one that will give the central banks a huge headache and to consider to hike its interest rates than the other commodities in the CPI basket. Why is this so? In short, people can still live with some inconvenience without cars or petrol, but not without food. Therefore, there is an urgency for the policy makers to first take care of the basic needs of the people. Content: . Long-term direction of Live Cattle . Trading ideas . Investing ideas Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. A little hack here to project the coming CPI data and also to know how aggressive the Fed will be with interest rate hike - you may consider to track the development of these edible commodity prices, if it is still trending up, we should be expecting a higher CPI and interest rates. Example on Live Cattle Futures: 0.025cts = US$10 0.10cts = US$40 145.00 = 1450 x US$40 = US$58,000 From 144 to 145 = US$400
CME:LE1!
by konhow
9
Specific Trendline to Determine the Direction of any MarketHow to identify the specific points for trendline to determine the direction of the market? In this example, I am using the Nasdaq index. You can use this trendline technique to any markets because its principles in this tutorial are applicable throughout whether to an individual stock, indices or even commodities. I am going to introduce the primary and secondary trendlines, I hope after this tutorial, it will bring greater clarity in how you can deploy them. Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. This method I just shared, it can be applied to any market and any timeframe, be it the minute chart or the weekly chart. Micro E-Mini Nasdaq 0.25 = US$0.50 1.00 = US$2
CME_MINI:MNQ1!Education
by konhow
11
Bitcoin - For Trading Not for InvestingWhen Bitcoin was trading at around 60,000 level in late 2021 and before that year, whenever friends, acquaintance and participants asked my opinion about investing into cryptocurrency, immediately I knew they may not know much about cryptocurrency. To clarify, I am not an expert in cryptocurrency, but I know its intrinsic value could not be calculated then and even today, therefore it is an instrument not for investing but for trading. Let me elaborate, as long as we cannot define its intrinsic value to any so-call an asset, it is not an asset, but an instrument for trading. When we get into trading, meaning, we have to acknowledge the getting in and out, out also represent to exit the market with either a profit or a loss, it is part of the deal in trading – we have to be quick when we make a wrong decision. However, if you position yourself as an investor in crypto, you will either always perceive it will break new high or hope that it will someday go back to its former glory. Throughout the whole tutorial, I will do a recap on how I have spotted this top here in November 2021. I have done this in another personal forum I have back then. I will go through that and it may seem like a hindsight view, but I will apply the same strategy to the current market using just trendline and divergence. Bitcoin Futures Minimum Tick: $5.00 = US$25 or $1.00 = US$5 Contract Value: 20,000 x US$5 = US$100,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME:BTC1!Education
by konhow
2
CME WTI Crude Oil Break Out After Fed Meeting? $101 Next Stop?Crude Oil Futures saw a high (~$123.00) on June 14, 2022, and have been retreating ever since. I am not in the fashion of calling bottoms, but there has been some nice consolidation over the past 2 weeks! July 14th saw a recent low (~$90.50), and we have not tested that area yet! Here is what the charts are telling me: 1. The downtrend line from that June 14 high is currently being tested as I type ($98.75) If this downtrend line is broken with conviction, the next stop is ~$101.00. This level was SUPPORT (July 7-12). This ~$101.00 SUPPORT level was broken and became RESISTANCE! CL tried to break this level on July 19, but couldn't do it. Here is the thing though! After it tested the ~$101.00 level on the 19th, it did NOT make a new low! In fact it stopped at ~$93.00 (Low was ~$90.50) Uptrends start with higher lows. We traded ~$99.00 yesterday, which coincides with that GIANT down trendline from a month ago. If we break these in the overnight session, ~$101 it is!. 2. MACD has positive divergence. What does this mean? The MACD made a higher low, as the CME WTI future traded lower. This basically means the downtrend is slowing down. 3. Upside targets after ~$101 Are: ~$103.00 (.382 Fibonacci Retracement from ~$123.00 - $~99.50) ~$105.33 (RESISTANCE from July 8) ~$106.86 (50% Fibonacci Retracement) ~110.72 (2 factors here! .618 Fibonacci Retracement AND Resistance from July 4!) This whole scenario is considered to fail if it breaks the up trendline formed from the low made on July 14, to the next higher low made on July 25 ~$93.00. CME Micro Futures are a great way to enter this positive risk/reward trade. FEEL FREE TO DM ME WITH ANY TECHNICAL ANALYSIS QUESTIONS YOU MAY HAVE! HAPPY TRADING! MACD Education: Developed by Gerald Appel in the late 1970’s Useful in trending markets because it is unbounded MACD Line = (12 period EMA - 26 period EMA ) Signal Line = 9 period EMA of MACD Line MACD Histogram = MACD Line - Signal Line Convergence occurs when the MA move towards each other. Divergence occurs when the MA move away from each other. Typically the 26 and 12 period EMA are used Oscillates above and below 0 When MACD is positive, the shorter average is above the longer term average Signals when it crosses from below to above the signal line Histogram was developed by Thomas Aspray in 1986 Signals MACD above or below signal line
NYMEX:CL1!Long
by Paul_Wankmueller
Commitment of Traders Report from 19 to 26 July The CME report from Tuesday the 26th of July to Tuesday the 19th of July came out The reportable figures from the Dealers/Intermediaers (Exchanges/Brokers) and the Asset Managers/Insitutionals show negligible increases in Longs/Shorts BUT The SPREAD increase is nearly a 90% increase for said Exchanges/Brokers as well as a 62% increase in spreads for Asset Managers/Institutionals A simple way of understanding Spreads: A higher (wider) spread means there is a bigger difference between bid-ask (buy-sell) prices whereas a lower (more narrow) spread means there is a smaller difference between bid-ask (buy-sell) prices tighter spreads are a sign of greater liquidity, while wider bid-ask (buy-sell) spreads occur in less liquid or highly-volatile stocks Because of this - The current upwards move seems to be less volatile than the previous down move Theory - Exchanges and Institutions bet heavily on the current low volatility upside move
CME:BTC1!
by TrendmasterOfficial
Using S&P to Identify RecessionInstead of waiting for NBER to officially declare the confirmation of recession, an alternative way to identify is using the U.S. indices quarterly chart, especially the S&P. Typically, economists call a recession when GDP has declined for two consecutive quarters. A committee at the National Bureau of Economic Research (NBER) is responsible for officially declaring when recessions start and end. Why I favour S&P over Dow Jones and Nasdaq? It has 500 companies from the largest to the smallest and from various industries. It is commonly use to benchmark for stock portfolio performance in America, a much wider and broader measurement. Whereas Nasdaq is Tech heavy and Dow Jones with too limited stocks of 30. Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME_MINI:ES1!Short
by konhow
In Search of an Edge for Non-Professional TradersCBOT:ZW1! What do Gold, Crude Oil, Natural Gas, Corn, Soybeans, and Wheat have in common? Their prices all go up in a global crisis. In other words, these strategically important commodities are positively correlated with the level of risk. “Risk Up, Price Up; and Risk Down, Price Down”. Everyday non-professional traders (NonProfs) usually have a disadvantage trading these futures contracts. Let’s see who we are up against: • Commercial Firms, including producers, processors, merchants, and major users of the underlying commodities. • Financial Institutions, such as investment banks, hedge funds, asset managers, proprietary trading firms, commodity trading advisors and futures commission merchants. These professional traders (Profs) have industry knowledge, market information, research capabilities, trading technologies, high-speed and seemingly unlimited amount of money. They contribute to about 80% of trading volume for a typical futures contract. So, what could you do in an uphill battle? Recall our Three-Factor Commodity Pricing Model( ): Commodities Futures Price = Intrinsic Value + Market Sentiment + Global Crisis Premium In peaceful times, the coefficient of Crisis Premium is zero. The Profs win out easily. When a global crisis breaks out, price pattern may be altered completely. The chart illustrates how CBOT Wheat Futures behaves before and after the start of Russia-Ukraine conflict. Based on Efficient Market Hypothesis (EMH), a baseline futures price reflects all information regarding the Intrinsic Value and Market Sentiment factors. However, the Crisis Premium is unknown to all of us. The Profs could not use fundamental analysis or technical analysis to gain a better understanding of Mr. Putin’s mindset. Few had inside information of the inner working of the Kremlin or the Russian generals, either. Your guesses are just as good as the Profs when it comes to what’s happening next. An analogue: In a close-range hand combat, the Profs have no use for their arsenal of missiles, fighter jets and tanks. NonPros with limited resources are on an equal footing to trade against the Profs. It’s critical to pick a fight that you have a chance to win. Recall that we discussed how to define global crisis with binary outcomes, and select financial instruments based on their responses to those outcomes. ( ) For CBOT Wheat Futures, Ukraine conflict has become the dominant price driver since February 14th. But after four months, we still have no clue when or how the war could end. Let’s define it in two simple outcomes: War and Peace. The first one includes all scenarios that the war would continue or intensify, where the second one could be a peace deal or a victory in favor of either Russia of Ukraine. As a NonProf, you don’t want to dive deep into the impossible task of forecasting the different scenarios. Keep it simple: War = Risk Up, Peace = Risk Down. The probability of either outcome is real. It’s difficult to predict which one is more likely. Therefore, directional trades of Long or Short are both risky. Many event shocks exist to make the wheat price fluctuate. If a major wheat producing country announces an export ban, wheat price could fly because of global market shortage. However, a phone call between Mr. Putin and Mr. Zelenskyy could punch wheat price to the ground. Russia is the No. 1 wheat exporter. An end of the conflict could end the sanctions against Russia and increase global supply by 44 million tons of wheat. Looking back in 2018 and 2019, we know how strongly Gold Futures reacted to a call between the U.S. and China. A Long Strangle options strategy may be appropriate under these circumstances. Investor would purchase a Call and a Put option with a different strike price: an out-of-the-money (OTM) call option and an OTM put option simultaneously on the same wheat futures contract. This is based on my belief that wheat futures price could experience a very large movement, but I am unsure of which direction the move will take. The following is an illustration (not an actual trading strategy): September Wheat Futures (ZWU2) is quoted at $10.54/bushel on June 14th. An OTM call with a $12.00 strike price is quoted at 17 cents. An OTM put with a $9.00 strike price is quoted at 4.625 cents. Look at the chart again, you will see wheat price at $7.80 right before the war and up to $13.70 in early March. A Long Strangle will cost $1,081.25, as each call and put contract is based on 5,000 bushels of Chicago wheat. This is the maximum amount you would lose if wheat price stuck at current level in the next two months. A big move, either up or down, could make one of the two trades profitable, and hopefully with enough profit margins to cover the other losing trade. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CBOT:ZW1!
by JimHuangChicago
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