IIFT Daily Note with Peter Brown

FOMC minutes set the dollar higher.

Posted by:  |  Time: 7:38 am  |  Topic:  |  Comments: 7
Trading Is At Your Own Risk - Read Our Terms & Conditions

IIFT 2

Good Morning

A very quiet day yesterday until the FOMC minutes that is. They were very hawkish with fed officials wanting to raise rates in June. That has set the cat amongst the pigeons. Dollar is higher and the equity markets are a bit softer. What happens now is that we speculate all the way until June, meaning the dollar will do well and stocks will be flat-lined. I have always liked the dollar and still do. So a bit high this morning but we may get a trade on there soon.

Indices are slipping, that is probably the best way to describe recent price action. A rate rise is not done by any means so a confused picture for indices. DAX should out-perform the US.

Keep an eye on oil today, are we topping out ahead of $50? That should be the driver of short term movements over the next few days.

A new strategic trade on oil this morning, see below.

DAX fade in play this morning.

On the calendar today:

ECB Minutes @ 12.30 pm (straddle)

Philly Fed @ 1.30 pm

 

ttp://www.iift.ie/economic-calendar/

 

Anyone looking for more info on the DAX fade trade or the Straddle trades

Comments and questions to pbrown@iift.ie

Links to interesting Articles:

These articles are useful to increase market awareness but do not necessarily reflect our views. Ctrl click to view.

 

http://www.economist.com/news/leaders/21698240-it-question-when-not-if-real-trouble-will-hit-china-coming-debt-bust

 

Day trading picture 1

S&P (Cash/DFB)

More or less the same levels as yesterday. It just shows rate rises are more an FX issue than an index one. Range bound I feel. Watch oil for sentiment this afternoon.

Conditions: Choppy Resistance: 2,054 Support: 2,033

Wall St (DFB)

As above.

Conditions: Choppy Resistance: 17,630 Support: 17,410

DAX (DFB)

We have the ECB minutes at 12.30 pm and that is a straddle opportunity on the DAX as well as the Euro. Ahead of that a fade play.

Conditions: Choppy Resistance: 10,000 Support: 9,800

FTSE 100 (DFB)

 There is no sign whatsoever of Brexit worries in this index, so nothing here for now.

Conditions: Calm Resistance: 6,165 Support: 6,055

EUR/USD (DFB)

 Euro looks set to continue this slide after yesterday’s FOMC. We have ECB minutes at 12.30pm and that may lead to more losses.

Conditions: Calm Resistance: 1.1250 Support: 1.1185

USD/JPY (DFB)

I am tempted to buy but I am not confident of any follow through so I am waiting for a cheaper level.

Conditions: Choppy Resistance: 110.70 Support: 109.70

AUD/USD (DFB)

Lower long term but range bound for now.

Conditions: Choppy Resistance: .7260 Support: .7150

GOLD (DFB)

 The prospect of a higher dollar is a bit of a kick in the teeth for the gold bulls. Sell on rallies at 1275 area.

 Conditions: Choppy Resistance: 1276 Support: 1240

SILVER (DFB)

Silver a lot lower on dollar strength and lower global growth forecasts. No trade here for now but we may get too cheap .

Conditions: Calm Resistance: 17.25 Support: 16.40

 

Strategic trades picture1

We are selling oil here US daily crude at $48. Stop loss $ 55 no target as yet.

 

Equity Trades picture1

LIVE Trades:

Royal Dutch Shell PLC A (LSE) Jun 16

Average Long Position @ 1450 with SLO at 1450

The target is a return to 2000 or £20

The stock pays a large dividend circa 9% which spread traders will benefit 90% of.

 

New Trade:

Very similar to above we are buying BP @ 362 S/L @ 330 no take profit as yet.

 

 

 

 

 

 

7 Comments

Pablo Martinez

May 19, 2016

arrow

Hi Peter,

Any insight on how to play the straddle at 1230? How far should the working orders be placed away from the 1230 current price and size and expected SL / TP?
Do you place them very above and below and then move them closer as the news approach? how close?

Also what website do you use to watch the results?

Thanks,
Pablo

    Peter Brown

    May 19, 2016

    arrow

    Hi Pablo,

    WE will straddle Euro/USD. This is not a great straddle event and expectations are low.

    Yes we set it far apart in advance.

    By 12.29 you order should be set at 20 points above and below and 20 point stops.
    You do not need the news, use 5 min candles and when the market stalls cash in.

    As I said I have very low expectations for this one.

    Peter

Anthony Carroll

May 19, 2016

arrow

Hi Peter,
Re the oil trade: with a SL of 55 what is your thinking on risk / reward?
Regards
Tony

    Peter Brown

    May 19, 2016

    arrow

    I Anthony.

    I am looking at approx a 2.1 RRR. So 1 or 2% of capital on the trade would be appropriate.

    I think if we start to fall it could take 6 weeks to get towards $33/35

    Regards

    Peter

Peter Breen

May 19, 2016

arrow

Hi Peter,

Just on the oil comment above, what is your rationale for a short in oil and can you see it returning to prices as low as $33/35?? Oil has been rising steadily over the last month.

Thanks for the help.

Peter

Peter Brown

May 19, 2016

arrow

Peter,

Oil rose basically because it became too cheap. Now it is too dear. Supply and demand matrices are basically unchanged.
We are still in a low growth scenario and I suspect we have come too far on this bounce.

Yes I can see $35 again in a matter of weeks.

Peter

Peter Breen

May 19, 2016

arrow

Thanks Peter