The best teams play on the biggest stage on Sunday. Just like trading, it will come down to preparation and execution. Some players embrace it, some feel the extra pressure.
Those that are distracted will struggle with the challenges they face. Mental toughness is a requirement. Those that can eliminate the extra noise, stay focused and stick to their game plan have the best chance at walking away a winner.
THE FED
The torch has been passed. Wednesday’s FOMC announcement was the last one with Chairmen Ben Bernanke at the helm. He has received plenty of criticism during his tenure, but also had the support of two different administrations. He had the tough task of following legendary (and media savvy) Fed Chairmen Alan Greenspan, who sat in the Chair during one of the most prosperous economies in this country’s history. No matter what your opinion of his tenure, no one can deny Bernanke faced challenges that had never been seen before.
If may or may not have been a parting gift, but the current Committee gave incoming Chair Janet Yellen a good starting point. By voting unanimously (for the first time since June 2011) to cut the Fed’s monthly bond purchase another $10 billion, Yellen’s term will start out with everyone on the same page, instead of a battle between hawks and doves. The Fed stated that they will continue to monitor data to see if supports further tapering. The target interest rate will remain at current levels for a bit longer. I would expect we will see a few more cuts to the stimulus package before we see anything happen with interest rates.
I expect volatility to pick up a bit over the next few weeks.
E-MINI PUT SPREAD
This S&P 500 could test recent lows of 1764. I like buying the March E-Mini S&P 500 1740-1700 put spread at 8 points ($400.00) or better. I am looking at this as a premium play, trying to get a 10 point gain or better. Maximum risk is cost of entry plus fees and commissions. The March options go off the board on March 21, so we have some time to see this trade develop. If we are not seeing profits, I would exit near 4 points to avoid a complete loss.
THURSDAY WEBINAR
For those interested Walsh Trading holds weekly grain webinars on Thursday’s at 3pm central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
