Hi Folks.
As the US Government shutdown drags into its third full week, many of you (and me) have noticed that price action in the Futures markets have taken on a decidedly Forex-like psychotic spiking practice, something I just never noticed in Futures before now. I am guessing it's because a lot of the bigger players are staying on the sidelines for now until they get some form of guidance from the White House or elsewhere as to when this shutdown might resolve. For now, my advice (and take it for what it is worth) is don't put anything serious into play for the moment. If you need to take a Prop Challenge trade just as proof of life (many firms require one trade a week as a minimum) take it during off hours, and get out of it as soon as the numbers turn green. Don't risk being caught by one of those unexpected spikes. I got caught by one on the NQ this week and got filled 35 POINTS below where I clicked the Sell button. Shades of trading Gold on Forex all over again.
So until the markets make at least an attempt to return to normalcy, keep your powder dry and only get into the very best of the best trade entries. Far too much chop materializing at the most unexpected times (5 minutes after the markets open at 9:30 a.m. on a couple of different days last week is just one example of many) makes trading seriously a fools game for the time being. So let's be extra careful out there this week.
SUNDAY: Two numbers coming from countries we cover (CPI q/q from New Zealand at 5:45 a.m. and the Rightmove Housing Price Index from Great Britain at 7:01 p.m.) and a ton of numbers listed from a country I ignore (China) start us off this week. Neither number from New Zealand or Britain have any history of generating trade-worthy price action, so they are both a Pass.
MONDAY: Asian/London Session: 8 numbers over 24 hours and not a single one, including the IPPI and RMPI numbers from Canada at 8:30 a.m., are worth watching. It's all just a bunch of filler numbers that were never designed to make price go zoom. So the entire session, early morning and late evening, looks like a bust. Fed chatter from German Buba President Nagel at 3:00 p.m. and from Asst. Go. Jones from the Royal bank of Australia at 7:45 p.m.
USA Session: At 10:00 a.m. we may be witness to a miracle of Biblical proportions as the Conference Board Leading Index number shows up as the ONLY number out of the USA since the Federal Budget Balance last Thursday. The CBLI number has never, and by never I mean N-E-V-E-R caused price to move at all post-release, but today it's the only number on calendar in what has been an absolute wasteland since the shutdown began 3 weeks ago. So when you talk about a sports person playing well over their head, this might end up being the case here today as well, since passing on trading this number means traders will have to wait until Friday when the Flash Manufacturing and Service PMI numbers drop at 10:00 a.m. (no, I do not count the Oil or Gas numbers since they only appeal to a specialized group of traders). So, pay attention and maybe we'll see something I would have sworn a month ago had zero chance of happening: price action off the CBLI number release.
TUESDAY: Asian/London Session: The early numbers this session are as bad as all the numbers yesterday, although Lagarde from the ECB speaks at 7:00 a.m. at some Norwegian Climate Conference, so likely this one won't do much at all, but be aware. She does run the ECB. At 8:30 Canada releases their list of CPI numbers (6 at last count) and aside from last month's surprising 10 pip response, this one normally knocks out 20-30 pips in the half hour after release. So be ready, Loonie Traders. The New Zealand GDT price Index is a floater (no specific time given for release) so Pass, Nagel from the German Buba is back for round two today (this guy talks a LOT in case you hadn't noticed), and the Japanese Trade Balance number drops at 7:50 p.m. and is consistently at or below 10 pips, so Pass here as well.
USA Session: Waller from the Fed gives the Opening remarks at some conference at 9:00 a.m., followed by giving the Closing remarks at the same conference at 3:30 p.m. That API Oil Report drops at 4:30 for all you Oil traders. That's it. C'mon, Friday!
WEDNESDAY: Asian/London Session: At 2:00 a.m. the Brits release their CPI/PPI number combination, and at 4:30 a.m. their HPI number. Pass on the HPI (Housing Price Index) as it does nothing. The CPI/PPI combination usually gets across the 20 pip line at a minimum, except last month when it stalled out at 16. No matter. Going back much further than 3 months this one has been a reliable pip source, so pay attention at 2:00 a.m. Lagarde speaks (again) at 8:25 a.m., this time in Frankfurt (and there is no indication Nagel is speaking but it IS in Germany, so...). The Royal Bank of Australia releases their Bulletin at 8:30 p.m. but it's a report, not a number, and the Aussie's NAB Quarterly Business Confidence number is listed as "tentative" so not much we can do with that one either.
USA Session: Crude Oil at 10:30 a.m., and we are lucky to have that.
THURSDAY: Asian/London Session: A couple of reports out of Australia and Switzerland start us off, but "tentative" reports get a Double Pass for what I hope are, by now, obvious reasons. The Brits have a CBI Industrial Order Expectations number, which typically posts 12-15 pip runs, at 6:00 a.m. Today it can run without us. Canada releases their Retail Sales numbers (Core and Overall) but these are not the typical Canadian numbers that pop off 20-30 pips. They are much more like the US Retail Sales numbers which are hard pressed to generate 10 pips, and that's on a good day. Pass. European Consumer Confidence at 10:00 rarely makes even a blip on the charts, so Pass here as well. At 6:00 p.m. we get the Australian Flash Manufacturing and Services PMI numbers. These don't do much with the AUD either but we do get a sneak peak at what to expect from the rest of the globe after midnight. At 7:01 p.m. (Midnight:01 in the UK) we get the GfK Consumer Confidence number, which fills the Brits with so much confidence they release it after midnight. Pass. At 7:30 p.m. the Japanese release their National Core CPI y/y, and this one lately has had a hard time cracking 10 pips after release, but a few months back was a semi-reliable 20+ pip mover. Given how the week has gone so far with mostly dumpster-fire numbers, keep an eye on this one and if it comes in some ways away from expectations, we might see a return to 20+ pip moves, at least for one night. Australian Fed Speak from RBA Governor Bullock at 8:05 p.m., followed by the Japanese Flash Manufacturing PMI, which hasn't done much in a long while in terms of price action, so Pass.
USA Session: Existing Home Sales at 10:00 and NatGas at 10:30 a.m. We did have a housing number drop last week (I can't recall which one off the top of my head) but even in this Economic Desert we find ourselves, where every number that sees daylight should create at least a small furor, that housing number came and went without even a price blip. So expect the same today. Pass.
FRIDAY: Asian/London Session: Our last session of the week begins with the British Retail Sales m/m number, which has been a fairly reliable source of 20+ pips (2 months ago it stalled around 14 but last month handed out 40+ pips like Halloween candy). No idea which version will show up today but this one is definitely worth a look. Ignoring Spanish Unemployment at 3:00 a.m., we then get into the Flash Services and Manufacturing numbers carnival, with numbers dropping in pairs starting with France 3:15 a.m., Germany 3:30 a.m., Eurozone 4:00 a.m., and Great Britain 4:30 a.m. If you see a trend developing as a result of a string of good or bad numbers, ride the trend. Otherwise you can ignore the actual numbers as they are too erratic to forecast. Canada graces us with their National Housing Price Index at 8:30 a.m., which historically does little or nothing to the Loonie, and here's a surprise: at 8:45 a.m. German Buba President Nagel is set to speak yet again (this guy never shuts up...what is this, his third appearance this week? Fourth?) Anyway, be aware he's out there because the head of the German Buba is on par with Powell and Lagarde. We close with the Belgian Business Climate number at 9:00 a.m. and no one really cares about this one.
USA Session: For reasons I cannot quite grasp, FF has listed the CPI numbers as dropping at 8:30 am. this morning. I have not seen anything in the regular news about the Bureau of Labor Statistics going back to work, shutdown or not, so I'm guessing this is just wishful thinking on someone's part. However, broken clocks are right twice a day, so unless this disappears from the calendar between now (Sunday morning) and then, be ready for some real fireworks just in case. Odds are it won't appear but don't get left behind if it does. After that we have a couple of number sets that WILL appear today. 9:45 a.m. is the Flash Manufacturing and Services PMI, which is NOT the ISM numbers which really generate activity, but just the vanilla version put out by S&P Global, which is definitely NOT a government entity. So again, under the theory that we have only had one or two legitimate numbers drop this week, and assuming we don't see CPI in the previous hour, this one might end up giving traders some real price action for a change. Then at 10:00 we get the Revised UofM numbers, Consumer Sentiment and Inflation Expectations. The revised versions don't generally produce the kind of price action we see with the early versions that came out a couple of weeks earlier, but these are not normal days, so be ready for these numbers as well. Finally, the calendar shows New Home Sales at 10:00 a.m., but lists it as "tentative" (normally a 10:00 a.m. number). This is a Census Bureau produced number and last time I looked the Census Bureau was still a US Government agency. So either someone at FF knows something about Friday the rest of us don't, this one will disappear at some point this week as well and we will be done for the day after the UofM numbers.
And that's all the forecast that's fit to print for this week. See you next week when (hopefully) we will be on the path towards normalcy once again. But don't bet on it.
Jeff
