It seems the Asian markets care more about future US monetary policy than most Americans. There has been much discussion in numerous global media about the nomination of Larry Summers to succeed Bernanke as the Federal Reserve Chairman. Summers is viewed as a hawk who would tighten US monetary policy which many believe would falter a US economic recovery which trickles down to the rest of the world. Speculation has been going over the next chairman for several months without affecting the global stock markets very much. Over the weekend, Summers withdrew himself from consideration for the Fed Chairman role which opens the door for the ultra-dove Janet Yellen. Yaaahoooo! The ES opened the Asian session up 9 points before taking it nearly another 12 before falling short of the ES all time high at 1705. Almost a 2x average range move in 30 minutes. The ES calmed down after that. The European session didn’t know what do to with the high ES prices and waited for the US session to take over.
There were a couple of pre-market economic numbers, but they didn’t matter… we’ve have a Fed driven market. Since the near all-time high at the Asian session open, the ES started making lower highs which started forming a potential down trend into the US session. At the cash open, there was a short continuation order flow opportunity after a bounce off the DTG 97.50 level, but I wasn’t ready for it. The ES moved down and bounced off the bottom of the DTG 92 level and traveled up to the VWAP. The pull back was shallow, but institutional buyers were still interested and given the strong overnight gap, there was a decent chance the bulls would retest the all-time highs. It wasn’t the greatest long order flow opportunity, but then after the first short opportunity at the open, none of the opportunities had very much follow through today.
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