The release of the FOMC minutes on Wednesday gave the bulls enough energy to push the S&P 500 near record highs. The minutes from the July meeting revealed that Fed officials may be more aggressive than first thought in ending the current stimulus program. Many observers are marking the October Fed meeting as a strong possibility for ending the asset purchase program.
As always, we were reminded that the Fed will continue to monitor and be heavily influenced by jobs data in making policy decisions. The Fed has hinted that they may also raise rates sooner than expected if the numbers meet their objectives. In case you were wondering, the most important part of that last sentence is “if.” Traders will be back to closely watching job numbers now that they think the Fed has become a bit more aggressive.
Go With The Trend
I’m going to join in on the upside exuberance. I like buying the September E-Mini S&P 500 1995-2025 call spread at 9 points ($450.00) or better. Risk is limited to the cost of entry plus fees and commissions. I’m looking for a target exit of 20 points. If this market looks like it has run out of steam, I would look to get out for a 5 point loss.
Have A Plan
Like many other parents, I will be taking my daughter back to college this weekend. As usual we have a list of all the “necessary” items, and then debate what is actually necessary to take with her. What is not debatable are things on our worst case scenario list, and what she should do in case of an emergency. It’s better for us to have a plan for those situations than not knowing what to do if they arise. It’s not a bad idea to do the same with your trading.
Webinar
For those interested Walsh Trading is holding our weekly grain webinar today Thursday August 21st at 3 pm 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.
