50-50
Financial futures are flat-lining ahead of the Federal
Reserve’s decision on monetary policy. The announcement is due out at 2:10 PM
ET. Just what is the market expecting? The best predictor of Fed action in the
days preceding FOMC meetings have consistently been the Federal Funds
futures.Â
The April Fed Funds futures
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95.120, is pricing in a 50% chance of a 75-basis-point cut. Since there is no
FOMC meeting in April, the 50-50 stance of the futures implies many observers
are betting even odds that the Fed under Greenspan’s stewardship will be its
most aggressive ever. The 50-50 odds of a .75% cut also suggest some believe
another inter-session cut of 25 basis points is possible if the Fed only goes 50
today.
Stock index futures are beginning to rally in
anticipation of the rate news. Lewis Borsellino has pointed out in his afternoon
commentaries on days of Fed announcements and in his Stock
Index Futures Trading Course that the S&Ps often make three moves before
taking their decisive trend in the fourth swing.Â
In the energies, natural gas
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is in day three of a pullback from lows and trading on the top of its range,
setting it up for a test of the March 9 gap, which should provide resistance and
a compression area for further tests of the downside out of NG’s bigger picture
bearish pattern.Â
For those who like to trade reversals at lows, May sugar
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is trading just above the trigger of a Turtle Soup Pattern at both a new 20-day
and three-month low. Any reversal would likely be a swing trade, as the daily
pattern of declining tops and weekly head and shoulders pattern keeps the
pressure on the downside.Â
Cocoa
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neckline of a head-and-shoulders pattern. The May contract rallied to the round
1000 level, where it filled the morning gap-down. The narrow range is providing a
defined-risk opportunity for short setups against the bigger-picture bearish
pattern in cocoa.