The Really Useless Thread

As far as what to track beyond currency flows, I guess I would have this list:
Bond yields. (Driver of the expectations car) 2YT and 10YT, Bunds


Gold. (backseat driver with plenty of opinions but no control over the route)


Oil. (hitchhiker in passenger seat along for the ride but with a different destination in mind) Brent and WTI spot.

Equities. (petulant child dragged by ear into the back seat and forced to go wherever driver takes us) S+P 500, FTSE, DAX etc. attention to financial sector and to a lesser degree reits.

Am I way off? Missing something major?

First point for today. News is split in 3 different and equally important parts so it's rather complex flow that can bring sharp volatility at different stages and directions if we miss or over/undershoot expectations in one or all.

Just to make things easier to understand and to highlight some comments about yesterday's posts that I think were very good but they miss some of the factors in play for today

1. The Headline Rate decision. This is the first quick and fast knee jerk reaction.

=> What are the minimum expectations? Since October we are set for a .25 hike (to 0.75).
=> Where are we? As you very well know we have nearly 98% digested that hike. We pretty much completed the expectations part of the leg back in the last NFP.
=> What are expectation range in play? 0.25 is the minimum. 0.50 hike is still on expectations. A hike 0.50 is not fully digested (+/- 60%) in most ket markets (Equities and Dollar) but is already well in play in Bonds (which are the king maker at the end).
=>What will be an under/overshoot? No hikes will be a major flop(not expected) and will create a very sharp knee jerk reaction in Bonds and Dollar but it will put Equities on steroids. A hike 0.75 will be an overshoot (marginally expected) but will match FED 2016 expectations set last January. In contrast the short term impact will be felt in Equities while only adding momentum in Dollar and Bonds.

This is ONLY for this part of the news !!! (you can see how powerful today can be). In a nutshell: "good or bad news is good for equities in the short term" while "only a flop will short-circuit Dollar and bonds"

With that in mind we can move to the second part of the move: A superlative important key economic projections and the Statement....

TBC

sisse

Thin markets and NY to come ...watch-out for news may trigger the early move....

sisse

Inflation overshoot, sales miss and by a considerable margin .... interesting times ahead.

sisse

Wow! You guys are good, great posts and charts including flows for different scenarios, way beyond my pay grade at this stage! Am just posting a very simple chart with short commentary of just the 3 basic scenarios of Inline, Dovish & Hawkish. Of course further permutations arise because each of these contains further degrees of intensity, eg mildly dovish, extremely dovish or even Flop, but am keeping this short and simple.

Inline: This would be 0.25% rate increase, moderate increase in dot plot expectations, at least 2 hikes likely for 2017, cautious & dovish comments.

Dovish: 0.25% or less rate increase (even Flop), disappointing or no clear discernable change to dot plot expectations, strong re-iteration of mantra of only very gradual rate rises on the horizon, a highlighting of global risks.

Hawkish: 0.25% or more (even Big Bazooka +0.5%) rate increase, positive increase in dot plot projections & rate rises for 2017, highlighting positive outlooks on economy.

I don't think there can be ANY mention of Trump or any possible effects his future policies might have. Fed never mentioned the election last time and obviously can't frame their economic policy on what might or might not materialize but will stick to facts and evidence. Therefore the "positive exuberance" which the market is experiencing due to Trump expectations will not be reflected in their statement and therefore I expect today's net effect to be one of disappointment.
Also, the sharp increase in recent Bond rate rises should be of some concern to the Fed and they might want to pull a handbrake here & dampen expectations of the rate of Fed rate increases for 2017.

Regarding E/U I don't really know enough to comment on any Flows but only general direction, and my feeling would be that inline will be $ negative and entail E/U going higher due to disappointing expectations due to what's already been priced in, the extent of the rise depending on just how positive or negative the "Inline" will be.
Likewise with Dovish/Flop, only with E/U rising correspondingly higher.
Hawkish or Big Bazooka (0.5% rise extreme positive dot plot) and we break the bottom of range heading to extreme.

PS: Haven't had a chance to read the most recent posts so apologies if I've missed something obvious!

If I understand you correctly are you saying that a 0.5% to 0.75% hike would be positive for equities? ...but surely not in the first knee-jerk reaction to the announcement and if so then only much later in the flows?

2. A superlative important key economic projections and the Statement.

Here is the real deal for today. Two things to track here:

1. The usual dots 'mumbo jumbo' that will give us a rough path for next year. We are expecting 2 hike next year (assuming a .25 rate today). Anything else shifting towards 3 or 4 hikes will unlock a whole new map for Q1 2017 across all markets.
   1. All eyes in Treasuries breaking down, Dollar will follow swiftly while Equites will take as very good news for the mid and long term but the high of the current leg will be around the corner in a matter of days.
   2. At least here there is nearly 0 chances for a flop. Anything else will be inline an uneventful

   
   

2. The second and very important today is the economic projections. All eyes in inflation, especially after Trump election. Any slight hints of inflation expectations increasing will be EXTREMELY HAWKISH. Here is the steroid shot for Equities and it will be major mover and shaker across the commodity board. Dollar will follow thought automatically as it wont hold the pressure.
   1. On the macro economic front, markets expecting a VERY upbeat outlook. Anything less than that will be a disappointing and will put a a strong cap short term in Equities and Dollar.

   
   

The juicy 'meat' is in here. The dots will cause a short term reaction but the macro expectations will set the tone for next Quarter and beyond ....

As if we didn't have enough to digest today we also have the final part of the move:

3. The Conference.

FED (YELLEN) conferences are usually very dull and boring in comparison with the ECB and BOJ. This time it will have a bit more importance. Expecting a flood of political and politicized questions from the main stream media but also expecting some key comments on the macro outlook especially from the inflation front.

1. FED wont mention anything directly related to Trump plans but markets will track in extreme details the 'tacit' implications of it via inflation and fiscal policy FED expectations.
2. This will be extremely hard flow to forecast before hand as its an open with theoretically question about today's hikes to monetary policy in the mid and long term.

In terms of the flows. Today can be seen as a Tic-Tac-Toe game.

The initial knee jerk reaction on the rate headline is the first O, it will be short lived. The second O comes from the projections and statement. The dots is the preemptive part, the core of the macro outlook is the real deal but it wont trigger until the conference is under way and Yellen reconfirm indirect or explicitly in the conference which is the third 0.

If we get the three O O O get ready because we are for a major mid term swing. Anything in between is how fast, slow things will pan out ....

NY opening ... and later we can continue with the timing and TA part ...TBC

sisse

Buckle your seatbelt Dorothy 'cause Kansas is going bye-bye.

Links to conference:
http://www.ustream.tv/federalreserve
https://www.federalreserve.gov/media...-broadcast.htm
Bloomberg also third option.

Dot list on website federalreserve.gov under "monetary policy" (not sure exact release time).

whatching for 2 levels to build shorts:
BUNDS: 163 and above
UK100: 7000 and above

No better chance left this year to shake down the crowded bull trade and set up a good entry for the Santa rally. Total wishful thinking but I am looking for a 30-50 pt pullback in /es into next week.

That was it with Europe going home.

FED time ...

--> From the TA side.

As mentioned before lets try to build on the previous post instead of me chewing down a map for today.

A couple of important things here before we dig into TA:

 

1. The scope of the trade is far beyond today's knee jerk reaction. Only if we get a major triple whammy/flop (not expected at all) will get a clean sweep move that will kill the trading range in a few sessions.

-> We have 2 plays, the main one is mid term legs across the board that comes in play first on the W close and more importantly for the Yearly close for Q1 2017.
-> We also have the news flow play (which could be major given what its in play) that comes into play with todays reaction and extends to next week to close 2016.

1. There is NOT ANY short term swings in play in Equities, Currencies, Bonds and GOLD. The only ones that have a short term swings (but not mid term) is OIL and NG (for those still holding)
2. Starting right now ALL MICRO AND SHORT TERM LEVELS (well said @hoom) are raised. If you want to be the smart ass to outsmart the move or just trade crumbs until the FED you are basically playing plain stupidity...only newbies and retail serial gamblers now in the market.

=> With that in mind. Lets start from the macro to the micro building the maps using the info some fellow traders posted in the pages before.

...
sisse

We don't have much time, lets do this as quickly as possible.

+++ Building a map for the FED News Flow +++

There is one clear level that is consensus in all previous post and also agree with it. That level is 1.097x. The second level repeated a few times is 1.046x. Sure is the low 2015 and 14 year old lows but I personally don't have anything important TA wise there except the reference tag that is the low but lets take it for this map.

So let's build the map. I'll leave a gap of a few minutes to see if somebody wants to jump in or ask ...otherwise I will move fast

.....==> 1.097x (Strong R) .... .....==> xxxxx (.... R) .... .....==>xxxxx (Flip) .... .....==> 1.046x (Soft S) .... .....==> xxxx(...S) ....

Anybody disagree or have questions? now lets define the most important one, the FLIP and the finals R and S... any takers?

sisse

Final R 1.080, Flip 1.065 and final S 1.02?

Mine:

.....==> 1.097x (Strong R) .... .....==> 1.085 (.... R) .... .....==>1.066 (Flip) .... .....==> 1.046x (Soft S) .... .....==> 1.02(...S) ....

610/24 flip, 710 R is my idea of it anyway. Thats how Im trading it.

could also see 710/30 flip 850 R

Anybody disagree or have questions?

I don't disagree, only perhaps how 'soft' 046 is.

flip=1.06x would b my take on it...could also see 1.072x

Mine;

710 flip, 1,0870 R, 1,03X S

meant 1.066x typing with 1 hand and working with the other

1.097x (Strong R) .... .....==> 1.083x (soft R) .... .....==>1.071x (Flip) .... .....==> 1.046x (Soft S) .... .....==>1.033x(strong Support)