With the first trading session of the year on deck, investors are sketching their market predictions for 2017. Which sectors will be hot? Will the oil rally continue? Is the IPO market poised for a comeback? More record M&A? Elections results in France and Germany? How will Brexit turn out? Other trade agreements? Tensions with China, North Korea, Russia, Mexico? Upcoming U.S. monetary policy? How will a Trump presidency shape the markets? Any other stock-related tea leaves?
It will inevitably be another big year for crude watchers as the truth over whether oil producing countries will cap output is made clear. Jan. 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries in November last year to reduce production by almost 1.8M barrels per day. In the session today, crude is pushing higher: WTI +2.4% to $55/bbl.
The dollar index kicked off the new year by making its biggest one day gain in over two weeks, rising 0.4% to 102.63. Most analysts expect the greenback to continue strengthening in 2017, because the economy appears likely to withstand multiple Fed rate hikes, making it more attractive to hold dollar-denominated assets. Despite pressure from a strong dollar, gold also extended its positive run into the new year following an 8% gain in 2016.
In Asia, Japan closed. Hong Kong +0.7%. China +1.1%. India +0.2%.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt flat.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +0.8%. Crude +2.4% to $54.98. Gold -0.4% to $1147.40.
Ten-year Treasury Yield +7 bps to 2.5%
(Source: Seeking Alpha)
Price is kicking off the new year in fine fashion, as overnight rally has taken back much of the lost ground on final day of 2016. We begin today’s session with tempered expectations as money managers and traders will need to get readjusted following long holiday break
Today is Cycle Day 1 (CD1)…Normal is for some magnitude decline, though price did reach lower cycle projections in prior CD3 Session. As such, this cycle’s rally appears to have already begun…Let’s see if cash session players keep a firm bid…Pullback buy response is expected on test of 2242 – 45 zone.
Range Projections and Key Levels
**Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: March 2017 (H) Contract
*****The levels outlined below are more general framework within a larger range…They are to be used are reference prices from which to consider trade opportunities, not hard trade levels.
Scenario 1: Price will need to hold bid at or above 2245 (3D CPZ) to hold the current overnight rally in-place. Upside targets measure 2254 handle followed by 225 – 2260 zone.
Scenario 2: Failure to hold bid at 2245 on any pullback would be sign of weakness opening the door for deeper downside test of 2238 handle. Violation of this level pushes price back into year 2016 territory.
Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.
Stay Focused…Non-Biased…Disciplined ALWAYS USE STOPS!
“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee
*****This trade strategy report is disseminated for “education only” and should not be viewed in any way as a recommendation to buy or sell futures products.”
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