There were several economic numbers this morning including CPI, building permits, and housing starts to give the markets something to consider for direction before they might fall into Fed wait mode. The FOMC meeting starts today before tomorrow afternoon’s announcement followed by a Bernanke press conference. The markets have been hanging on all-things Fed… I posted in chat this morning “These [the economic numbers] could provide some early volatility and direction, but I suspect the ES to either slowly grind in one direction or find a range and die to wait on more information about or from the Fed”. The ES opened and spent an hour in a 3 point range before breaking higher into the DTG 39 level. Despite RG’s warnings on the DTG worksheet, it appeared the ES was going to work 38 to 42 for a while and finding an opportunity at the top of the DTG 39 level would be a good place to trade the range. After a few false starts, a clear short order flow opportunity unfolded. Unfortunately after the opportunity unfolded, Fitch released a statement “if the Fed exits bond buying program in a gradual and transparent fashion, the impact on bond prices could be less significant”. This was obvious but good news for a market worried about Fed tapering and the ES broke up against the short position. Since this was the only clear opportunity today, it’s the example trade.
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