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Technical Analysis

Soybean (ZS) Weekly MACD Positively Crossing


Soybean (ZS) is breaking above triangle resistance (on the daily chart) going into today's US morning.  Significantly, ZS is on pace for its 5th straight weekly green candle, and is nearing the psychologically key 1000 whole figure level.  Before being able to reclaim 1000 though, some healthy profittaking can be expected for the final trading day of the week as the 4hr Stochastics begins showing fatigue.  Nonetheless, swing trading bulls are likely positioning longs now that the weekly and daily RSI, Stochastics and MACD are rallying or bottomish.  I am flat after profitably closing a long today and am looking to re-enter long early next week in the green zone (of the daily chart), targeting the red zone for mid next week.  The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I set my stops tighter).

 

Soybean (CME ZS Nov17) Weekly/Daily/4hr

 

 

Click here for today's technical analysis on Cocoa, Arabica Coffee

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures and spot FX markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and cryptocurrency markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 

 


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Options

Vol 411: VIX Closing Lows


CBOETV - Dan Deming, SPX down slightly, VIX futures, size Oct call spread activity

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Securities Lending

Sky High Rate Follows Price in the Cloud


Veritone (VERI)  develops artificial intelligence cloud-based solutions for audio and video processing and analytics with a market cap of $800M.  The company went public in May 2015, pricing at $15 per share, falling to $7 last month.  Short Interest has declined from 12% to 10% in the past 30 days with the rate moving from single digits to over 100% today.  Utilization is 87% and inventory is 5X oversubscribed.  We are seeing scraps from all sizes of prime brokers and agent lenders.  The next earnings announcement is expected to be in mid-November.

The analysis in this article is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Futures

Striking Options: 9/21 The Fed & Equities


Never miss out on daily futures and options trading opportunities - Click here to Subscribe to In FOCUS Newsletter for Active Traders.

This video is from CME Group and is being posted with CME Group's permission. The views expressed in this video are solely those of the author and/or CME Group and IB is not endorsing or recommending any investment or trading discussed in the video. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Fixed Income

Global Economic Perspective: September


Short-Term Concerns Mask Robust US Economic Fundamentals


The issues that have dominated news cycles in recent weeks should not obscure the robust underlying fundamentals of the US economy, in our view. Though some short-term weather-related disruption is possible, the economy seems to be maintaining its path of moderately strong growth, aided by healthy contributions from consumer spending and business investment. These conditions have continued to allow the US Federal Reserve (Fed) to move further toward its goal of normalizing monetary policy, after policymakers left interest rates unchanged in September, but maintained their forecast of a rate hike before the end of the year. We believe the Fed’s decision to begin downsizing its balance sheet in October is likely to have only a marginal impact on the economy and financial markets.

Further Evidence of Synchronized Recovery across the Global Economy 

As more and more countries deliver positive economic news, it raises the question of how sustainable the current upturn in the global economy could be. At this stage, we are still inclined to view this development as a cyclical recovery, rather than anything more significant. Determining a particular inflection point for inflation remains problematic, given the persistent structural forces that have suppressed prices since the global financial crisis. However, we continue to foresee a global environment characterized by higher interest rates.

ECB Flags Tapering Amid Stronger Growth but Weak Inflation

We believe the European Central Bank (ECB) adeptly negotiated the first stage of a potentially precarious path ahead at its September meeting. Policymakers are now looking to reduce the level of monetary stimulus, which seems appropriate given the strength of economic activity. At the same time, ruling out any increase in interest rates while bond purchases are scaled back, in our view, signals ECB President Mario Draghi’s determination to resist any political pressure to speed up the process of normalizing monetary policy. It also emphasizes his dovish inclination to await evidence of more sustainable inflationary pressures before contemplating any further major policy shift.

Short-Term Concerns Mask Robust US Economic Fundamentals

The issues that have dominated news cycles in recent weeks—North Korea, along with extreme weather in the southern United States—should not obscure the robust underlying fundamentals of the US economy, in our view. Though some short-term weather-related disruption is possible, the economy seems to be maintaining its path of moderately strong growth, aided by healthy contributions from consumer spending and business investment. These conditions have continued to allow the Fed to move further toward its goal of normalizing monetary policy, after policymakers left interest rates unchanged in September, but maintained their forecast of a rate hike before the end of the year. We believe the Fed’s decision to begin downsizing its balance sheet in October is likely to have only a marginal impact on the economy and financial markets.

Though market activity was somewhat subdued due to the traditional lull during August, a series of events—ranging from geopolitics to adverse weather—increased investor demand for the perceived safe haven of US Treasuries. Tensions between North Korea and the United States and its allies rose after several missile and nuclear tests by the North Korean regime, including one projectile that passed over northern Japan. The increasingly strident rhetoric from both sides and absence of consensus among major powers on how to respond to North Korea’s actions increased uncertainty, and by early September benchmark Treasury yields had fallen to their lowest level so far this year.

The US states of Texas and Louisiana were hit by Hurricane Harvey in late August, with severe flooding particularly affecting Houston, the fourth-largest US city and the capital of the country’s energy industry. In the aftermath, as many as a third of US oil refineries, many of which are located in the area around Houston, were estimated to have been impacted by flooding or supply disruptions. While the immediate impact was evident in higher wholesale gasoline prices, the overall effect on US economic growth appeared likely to be limited. Past experience suggested any short-term setback could be offset by increased expenditure in the months ahead, as infrastructure is rebuilt and economic activity rebounds. Nevertheless, with Hurricane Irma causing extensive damage across the state of Florida in early September, the potential for further weather-related disruption to the economy during the third quarter remained in focus.

One of the other issues that had been overshadowing the Treasury market in recent months was temporarily resolved, after US President Donald Trump agreed to provide a short-term increase in the country’s debt ceiling, and at the same time postponed a deadline to pass a budget. The president’s decision appeared to have been triggered by the need to avoid any shutdown of US government services that could hinder hurricane relief efforts.

In spite of these concerns, data elsewhere signaled the US economy maintained its robust footing. The estimate for annualized second-quarter 2017 growth was revised up from 2.6% to 3.0%—its quickest rate of expansion since the start of 2015—due to higher levels of consumer spending and business investment than initially thought. This pattern of a stronger-than-expected contribution from US consumers was reflected in July’s retail sales report, which not only came in well ahead of consensus expectations, but also included significant upward revisions to the weak figures seen in May and June. The positive backdrop meant consensus forecasts for third-quarter growth remained moderately strong, in the range of 2.5%–3.0%, even after the weather-related disruptions.

Though the 156,000 jobs added in August’s labor market report fell short of the figure predicted in consensus forecasts, any disappointment was muted by the historical tendency of data in August to be adjusted at a later date, with the initial level of hiring revised higher in five of the last six years. Nevertheless, combined with downward revisions to June’s and July’s payrolls, the August data were sufficient to push the unemployment rate off its 16-year low of 4.3% and back up to 4.4%. Hiring gains in manufacturing were a notable highlight, with the number of positions added matching the highest monthly total in four years. The robust conditions in US factories were underlined by the August reading for the Institute for Supply Management’s purchasing managers’ index (PMI), which climbed to its highest level in six years.

However, inflation readings showed no sign of breaking out of the passive trend of recent months. July’s core personal consumption expenditures price index—the Fed’s favored measure of inflation—managed only a 0.1% monthly rise, taking the annual rate down one-tenth to 1.4%. These figures were also replicated at the headline level. July’s Consumer Price Index painted a similarly weak picture, with respective monthly and annual gains of 0.1% and 1.7% held back by moderating housing costs and sharply lower cell phone charges. August’s labor market report showed annual wage growth stuck at 2.5%, despite the consistently high level of job creation.

In seeking to explain why inflation—and particularly wage growth—has remained so tepid, it may be useful to consider the demographic structure of the US workforce. Research has suggested that as workers from the “baby boomer” generation with relatively high salaries have retired, they have been replaced by younger employees receiving lower wages, thereby suppressing the rise in paychecks. When like-for-like wage growth (for the same job) was analyzed, it appeared to be roughly in line with the corresponding point in previous economic cycles. In addition, as baby boomers retire, the labor force participation rate would normally be expected to decline, whereas in fact it has stayed relatively high as the labor market has tightened. This would indicate that new entrants and former workers have been attracted into the workforce, although often into lowly paid, and often part-time, positions. The conclusion may be that there is some way to go before the dampening effects of demographics on wages and inflation are fully worked through.

Further Evidence of Synchronized Recovery across the Global Economy

The recent indications of a synchronized recovery across the global economy have continued. A rally in industrial commodity prices pointed to rising demand from China, the world’s largest consumer of such metals, many of which are integral to its construction of real estate and infrastructure. Official and independent PMIs for the Chinese manufacturing sector posted solid numbers in August, and both exceeded consensus expectations. Ahead of the next congress of the Chinese communist party in October, where President Xi Jinping will unveil his new leadership team, there have been indications that Chinese policymakers have increasingly shifted their emphasis away from potentially disruptive reforms aimed at reducing excessive debt levels, particularly among local governments, and toward stabilizing the level of economic growth. After the Chinese renminbi appreciated to its highest level in nearly two years against the US dollar, the country’s central bank eased some restrictions on the currency, a signal that the Chinese authorities’ concerns about capital outflows were easing.

Mexico is one of the countries where a turnaround in economic sentiment over the last 12 months has been most evident. In the second half of 2016, the Mexican economy faced multiple problems, including fears a Trump presidency would herald a more protectionist stance from the United States, the aftermath of a worldwide slump in oil prices and escalating inflation, the latter of which was exacerbated by a fall in the Mexican peso. In response to the threat from inflation, which in August of this year reached a 16-year high, Mexico’s central bank sharply tightened monetary policy, increasing interest rates at seven consecutive meetings up to June.

Moreover, while the threat of protectionist measures has remained, the political problems of the Trump administration may have lowered the possibility of aggressive unilateral measures by the United States on trade. The first two rounds of talks between the United States, Canada and Mexico—the member countries of the North American Free Trade Agreement—on reforming the agreement have so far been relatively uneventful, even if they are still at an early stage. The generally more positive backdrop for Mexico was highlighted by its central bank, which in August increased growth forecasts for 2017 and 2018, as well as stating its belief inflation had peaked. The change in sentiment has seen the Mexican peso climb back to levels last seen in mid-2016 against the US dollar, making it one of the world’s best-performing currencies this year.

After a surprise switch to a more hawkish stance in its monetary policy in previous months, the Bank of Canada (BOC) once more caught investors off-guard by following up July’s interest-rate rise with another hike in September, a month earlier than expected by consensus market forecasts. The central bank cited stronger-than-expected economic data—in the first half of this year, Canada’s gross domestic product (GDP) expanded by the most in 15 years—in support of its view that the country’s growth was becoming more broadly based and self-sustaining. Following the BOC’s decision, the Canadian dollar added to its gains against the US dollar, posting a two-year high.

As more and more countries deliver positive economic news, it raises the question of how sustainable the current upturn in the global economy could be. At this stage, we are still inclined to view this development as a cyclical recovery, rather than anything more significant. Determining a particular inflection point for inflation remains problematic, given the persistent structural forces that have suppressed prices since the global financial crisis. However, we continue to foresee a global environment characterized by higher interest rates.

ECB Flags Tapering amid Stronger Growth but Weak Inflation

During August and into September, data from the eurozone remained upbeat, with an already solid second-quarter performance revised even higher, pushing year-on-year growth to 2.3%, the quickest pace since the region’s debt crisis of 2011–2012. Business and consumer surveys pointed to continued momentum in the third quarter, keeping the single-currency bloc on course to potentially deliver its strongest calendar year of growth in a decade. Despite these signals, inflation showed little sign of life. An uptick in annual headline inflation in August was primarily driven by rising energy prices, and core inflation remained stuck at 1.2% for a second consecutive month.

The progress clearly underway in the eurozone’s economy heightened speculation about a tapering of the ECB’s quantitative easing (QE) program. This sentiment was most noticeable in currency markets, where the euro continued to move higher against many other major currencies. At first, market participants looked to a speech being given by ECB President Draghi at the annual Jackson Hole symposium of central bankers late in August, seeking hints about a change in monetary policy. When President Draghi’s remarks there concentrated on other topics, attention turned to the ECB meeting in early September. Here, policymakers confirmed they had initiated discussions on how to wind down the program of bond purchases. However, they also indicated a more detailed announcement on the subject would follow, most likely at their next meeting in October. The rise in the euro—seen as likely to prove a drag on inflation—was described by the ECB as a “source of volatility” that required monitoring. But in the absence of any suggestion that the currency’s appreciation would delay a tapering of bond purchases, the single currency’s rally—which by the end of August had taken it above US$1.20 for the first time since the start of 2015—resumed, following a brief pause in the run-up to the ECB meeting.

The difficulty for the ECB in managing market expectations on monetary policy in the face of stronger economic growth was evident elsewhere in President Draghi’s remarks, as he repeatedly stressed the need to keep the region’s interest rates at current levels while the central bank winds down its QE program. In response, market participants scaled back their bets on an interest-rate hike in 2018. The eurozone has undergone a loosening of the traditionally positive correlation between growth and inflation also seen in many other parts of the global economy. The latest set of macroeconomic forecasts from the ECB underlined this trend. Partly due to the stronger euro, policymakers slightly reduced their inflation forecasts for 2018 and 2019, while at the same time upgrading GDP estimates for the current year from 1.9% to 2.2%. Nevertheless, President Draghi re-iterated his belief that by 2020, inflation will have moved in line with the ECB’s target of close to but below 2%.

All in all, we believe the ECB adeptly negotiated the first stage of a potentially precarious path ahead at its September meeting. A highly accommodative stance has clearly boosted domestic demand, and policymakers are now looking to reduce the level of monetary stimulus, which seems appropriate, given the strength of economic activity. By downplaying the euro’s strength, they suggested any potential deflationary effects caused by the rise in the single currency are likely to be limited, barring an outsized further appreciation. At the same time, ruling out any increase in interest rates while bond purchases are scaled back, in our view, signals President Draghi’s determination to resist any political pressure to speed up the process of normalizing monetary policy. It also emphasizes his dovish inclination to await evidence of more sustainable inflationary pressures before contemplating any further major policy shift.

 

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.

This information is intended for US residents only.

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What Are the Risks?

All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in an investment portfolio adjust to a rise in interest rates, the value of the portfolio may decline. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments.

This article is from Franklin Templeton and is being posted with Franklin Templeton’s permission. The views expressed in this article are solely those of the author and/or Franklin Templeton and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Disclosures

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The material (including articles and commentary) provided on IB Traders' Insight is offered for informational purposes only. The posted material is NOT a recommendation by Interactive Brokers (IB) that you or your clients should contract for the services of or invest with any of the independent advisors or hedge funds or others who may post on IB Traders' Insight or invest with any advisors or hedge funds. The advisors, hedge funds and other analysts who may post on IB Traders' Insight are independent of IB and IB does not make any representations or warranties concerning the past or future performance of these advisors, hedge funds and others or the accuracy of the information they provide. Interactive Brokers does not conduct a "suitability review" to make sure the trading of any advisor or hedge fund or other party is suitable for you.

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