Seeking Alpha

The LFB's  Instablog

The LFB
Send Message
Turning 24-hour traded market momentum into actionable trading potential TheLFB is at the forefront of new-generation 24-hour global market trade support, offering an outsourced global market analysis program and White Label service. The company provides a subscription service for all level of... More
My company:
TheLFB
My blog:
thelfb-forex.com/Def...
View The LFB's Instablogs on:
  • Futures Trade Desk- Bullish Undertones Face Resistance

    Client Note

    Bullish Undertones Face Resistance


    Commodity Update

    Long Commodity trends that are over-bought may create intra-day short reversals, but seem unlikely to change the overall trend. The Commodity outlook remains bullish in light of heightened Middle Eastern tensions.

    Gold: Sup 1552 Res 1632 Neutral 1592. Silver: Sup 27.10 Res 30.90 Neutral 29.00. Oil: Sup 97.95 Res 105.65 Neutral 101.80. 


    Equity/Dollar Index Update

    Long Equity Indices trends that are over-bought may create intra-day short reversals that could change the overall trend. The Equity Indices outlook is very mixed going into Earnings Season. 

    Short Dollar Index trends that are over-sold may create long intra-day reversals, but seem unlikely to change the overall trend. The USD outlook is very mixed, and moving inversely to Equity Indices trade.

    S&P500: Sup 1242 Res 1296 Neutral 1270. Dax: Sup 5925 Res 6420 Neutral 6055. DXY: Sup 79.40 Res 80.80. Neutral 80.10.


    Currency Pair Update

    Long Currency trends that are over-bought, or Short trends that are over-sold, may create intra-day reversals, but seem unlikely to change the overall trend. The Currency outlook remains bullish against the dollar, with sustainable USD buying only being seen on days of heavy Equity Indices selling.

    EUR: Sup 1.2870 Res 1.3170 Neutral 1.3020. GBP: Sup 1.5540 Res 1.5775 Neutral 1.5605. JPY: Sup 76.40 Res 77.10 Neutral 76.75.


    Current Global Market Outlook

    Global Market Review


    When 4-hour chart trend and momentum reads are aligned across Equity Indices, Commodity, and Currency asset classes, a trending market is more easily achieved, and trade exposure and initial targets are generally increased.

    When trend and momentum reads are not aligned, a choppy and overlapping period of trade is more easily achieved, and trade exposure and initial targets are generally reduced.

    A long trend that is over-sold generally sets up for a long reversal off support. A short trend that is over-bought generally sets up for a short reversal off resistance.

    Markets that are over-bought into a long trend, or over-sold into a short trend, can remain that way for a long time. Any positions that are taken against the 4-hour trend will have to absorb choppy and volatile price action.

     

     

     

     

    Information, analysis and methodologies provided are for informational purposes only, obtained from sources believed to be reliable, and should not be used as a replacement for research by an individual investor or licensed investment professional. In no event should the content of this correspondence be construed as an express or implied promise, guarantee, or implication that profits or losses can be made or limited in any manner whatsoever. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

     

    Jan 05 9:14 AM | Link | Comment!
  • Futures Trade Desk- New Generation Markets

    Client Note

    New Generation Markets

    Cash is King for those who are unable to quickly react to the ever-changing intra-day mood swings in risk tolerance, or for those still yearning for Buy-and-Hold to reappear with a vengeance. Things are getting ugly as equity indices, currencies, oil, bullion, and Treasury yields are all being affected by pre-cash market ramps up and down that fail to follow through in the live regional session (read a 4.5% gap in German Dax, and 2% gap in S&P 500 to start the year). Its back to the January 2010 opening prices for S&P 500 as the stair-step up/elevator down moves continue.

    As boring as it seems, regurgitated headline news and volatile reactions continue to dominate the daily process of finding fair value. No new signals are forming either long or short on global asset class trade, as the mid-term charts remain unaffected by intra-day noise. 

    For traders not connected to the 24-hour global Futures market the waiting for regional cash markets to open can be somewhat frustrating. It is becoming abundantly clear that as much price action hits in the Futures market than in the regional cash market, and those traditional investors who are standing on the outside looking in while Futures trade adjusts to daily swings in fair value may be constantly missing the bulk of movement in any given day.

    The new normal, post-Too Big to Fail bailout environment has created a trading arena with a low attention span, and an algorithm driven pattern of trade that views one day as the equivalent of what was one month of trade just a decade ago. The consequence has been the evolution of a new breed of global market trader that has an understanding and comfort zone in trading a range of asset classes and is willing to change tack at short notice in reaction to changing global market dynamics. 

    The most common thread between new-generation traders is their focus on international markets, and how global correlations can be traded ahead of the 9-to-5 cash market open via Futures contracts. They are able to use 24-hour market access leverage and cross-border trading patterns in different asset classes to complete their work before regular traders even start to read the news headlines. 

    Futures Fair Value

    When the talking heads state that “Futures are in the green today…” the savvy trader has already found a way to access the momentum. In the current economic environment there is a need to create more time away from the charts, and Futures contract access allows that to happen for those who have realized that the halcyon days of trending buy-and-hold patterns have been replaced with buy-and-sell near-term trading. 

    One and four-hour charts are being used more often in setting trend and momentum reads in place of daily and weekly reviews which cannot keep track of new-generation momentum flows. The near-term views allow the new-generation of global trader and investor the chance to be in positions before each regional cash market opens. The facts are that as much price action happens in the Futures market trade as it does in the live cash session for each region, which is a pattern that will only get stronger.

    Unfortunately for most, taking the leap of faith and moving towards a new system of trade will be too daunting a task, but just as options and ETF trade emerged and developed, so Futures contract trading will draw traders and investors into a new world of 24-hour market access. 

    New-generation traders will cast their eye on overseas equities to see how the dollar is reacting, or look to London Libor rates impacting Chicago Futures markets, or to NYMEX oil trade impacting the order flows in commodity-based currencies. In the global world it is far easier now to leverage time than ever before, and the new breed of global market trader and financial institution has access to 24-hour new-generation support organizations that are doing the heavy lifting and research.

    Grandpa's Market

    The world of Futures trading is already a reality and is happening without the time restraints that made up Grandpa’s 9-to-5 market. For many traders and investors the reality of making use of leveraged time will be a compelling reason to garner more information on global market trading. For those unwilling to take on the learning curve of Futures trading or for those who just cannot make the time to access the 24-hour global market, the world of Managed Futures is starting to get main stream media attention.

    Futures, Forex, and Commodity trade offers access to the largest global markets which generate over $4 trillion in combined daily volume (source: BIS settlement data). Futures markets allow for the global exchange of goods and services in different currencies 24-hours a day, allow producers to hedge forward contract commitments, and allow speculators to offer liquidity as part of the cycle of global commerce. This daily process creates a global market-place with high momentum where Managed Futures can track the ebbs and flows of international trade and risk tolerance across each regional time-zone.

    The exponential growth in Managed Futures over recent years has been matched by the decline in Managed Equity funds (source: ICI annual Equity Fund reporting). There have been record equity redemption's at a time that Managed Futures have seen increased inflows. Managed Futures have been used successfully by investment management professionals for more than 30 years. 

    Institutional investors looking to maximize portfolio exposure continue to increase their use of Managed Futures as an integral component of a well diversified portfolio. With the ability to go long or short, Managed Futures are highly flexible financial instruments with the potential to profit from rising and falling markets. Managed Futures have virtually no correlation to traditional asset classes, enabling them to enhance returns as well as lower overall volatility. 

    Managed Futures diversify beyond the traditional asset classes as an alternative that has achieved strong performance in up and down markets alike. They invest across a broad spectrum of asset classes with the goal of achieving solid returns and reducing volatility via a near-term outlook. When used in conjunction with traditional asset classes Managed Futures may reduce risk while at the same time potentially increasing returns in bull and bear markets, boasting decent long-term track records despite economic downturns.

     

     

     



    Information, analysis and methodologies provided are for informational purposes only, obtained from sources believed to be reliable, and should not be used as a replacement for research by an individual investor or licensed investment professional. In no event should the content of this correspondence be construed as an express or implied promise, guarantee, or implication that profits or losses can be made or limited in any manner whatsoever. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

     

    Jan 04 12:05 PM | Link | Comment!
  • Futures Trade Desk- Stair-Step/Elevator Trade

    Client Note

    Stair-Step/Elevator Trade

    EU governments have reached a deal to ban Iranian oil imports, but as yet with no start date. Warnings were posted that this would escalate. Oil markets are spiking higher, as WTI tests 104.00 resistance. In response, bullion markets are testing overnight highs. Equities are weak. 

    Take care with any open position at this time; global market momentum, trend and sentiment are not aligned, which will create volatility. Potential trade set-ups and signals will require near-term targets and tight trailing stop-losses, at least until volume levels increase. 

    Bullion trade is dealing with 1625 and 30.00 Gold and Silver resistance which will be hard to break in one go. WTI Oil is holding 100.00 support. Regional equity indices held support, despite USD buying and EUR weakness in response to very weak Euro-zone Government bond auctions. 10-year US Treasury notes have massive support at 130.00, and with its inverse stock correlation will create major S&P 500 resistance at 1295.

    Global markets are back to their opening price points, on extremely light volume, awaiting a raft of Tier-1 economic releases due this week. The stair-step higher in Asian and European trade followed by the elevator down (and vice-versa) as Wall Street opens is still firmly in place, especially on the days that S&P Futures struggle to find buyers. The really important aspect of this decades-old pattern is that now the dollar buying is on very light volume, and really only getting any momentum in US-based trade. 

    The U.S. markets house the largest global equity and bond flow, the largest commodity activity, unmatched option and futures trade volume, but low currency volume in the U.S. session. The reason is the lack of global momentum to match the volume in other markets, due to the fact that after 11:00 ET the US is the only open regional market.

    The stair-step/elevator move starts with the 06:00 ET London fixings on oil and gold, at the same time that LIBOR rates are set, which force Chicago Futures markets to re-align fair value on equity, commodity, and interest rate Futures. That starts the reversal in currency direction that had been set in overnight trade, which is then hard pressed to stop the initial momentum building into strong currency order flows.

    The U.S. being the market leader in many areas really does not help currencies to easily find fair value especially on negative equity days, and most Asian and European positions need to be locked in before the 06:00 ET Elevator doors open. The stair-stepping starts again as the Asian equity markets really get going around 23:00 ET when the Japanese afternoon session gets underway.

     

     



    Information, analysis and methodologies provided are for informational purposes only, obtained from sources believed to be reliable, and should not be used as a replacement for research by an individual investor or licensed investment professional. In no event should the content of this correspondence be construed as an express or implied promise, guarantee, or implication that profits or losses can be made or limited in any manner whatsoever. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

     

     

     

    Jan 04 12:05 PM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.