Gas Keeps The Pressure On High
Natural gas is having another wild day, rallying back to
near-contract highs with a gain so far of 7%. The January contract
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weather in the midsection of the country. The NY Mercantile
exchange recently increased the margin in natural gas futures. The higher margin
has forced some players to exit the market or to scale back the number of
contracts traded. As a result, thinner trading is exacerbating the volatility
gas. Â
Major currency contacts are reversing for a second day. March dollar index futures
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registered a Turtle Soup Plus One Buy signal yesterday and are continuing higher,
up .43 at 113.35. Going the other way,
euro FX futures
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PowerRating) are coming off three-month highs for a second day
and are down .0040 at .89320. Much of this activity can be attributed to traders
closing dollar shorts (in an double top formation) ahead of today’s FOMC
announcement on interest rate policy.Â
T-bonds are also off from highs, as traders scale back
bets that the Fed will ease their bias at today’s FOMC meeting. This is in line
with Fed Funds futures readings. One of the most accurate
predictors of the Federal Reserve’s policy moves has been the Federal Funds
futures. Yesterday, the Fed Funds futures
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implied a 40% chance that the Fed would lower rates today by 25 basis points. In
today’s Fed Funds trading, these odds are coming down and are now handicapping a
28% to 32% chance of a 25 basis point rate cut. (To learn how to calculate these
figures for yourself, see Loren Fleckenstein’s article on Forecasting
the Fed With Fed Funds Futures). Bond honcho Tony Crescenzi went as far as
to predict a 50% chance of a 25 basis point cut in his commentary
yesterday.Â
March S&P futures
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PowerRating) setup early in a bullish intraday flag setup, implying they could
attempt a move out of a pullback. The have cleared one short-term areas in the
1351-52 area. Spooz pro Lewis Borsellino pointed out in his Borsellino’s
S&Ps A.M. that the there is a “critical area at 1351.50-1352
(1352 was yesterday’s high).” Using a Fibonacci approach, Carolyn
Boroden informed TradersWire that
1355.50 to 1357.50 is the next important intraday zone in this contract (1357
coincides with the top of the gap from Friday’s Microsoft gap down). Borsellino
has also identified the 1355.50 to 1357.00 area as “major.&