Carley Garner | Jan 14, 2015 11:20PM ET
Wednesday's session started out on rough footing, compliments of a reduction in 2015 growth forecasts by the World Bank. However, the Fed's Beige Book shed a more positive light on the U.S. economy. Despite global woes, the domestic climate is overall positive.
According to the Beige Book, the Fed sees the economy expanding at a modest-to-moderate pace in most of its 12 districts. Nonetheless, there were some concerns regarding the impact of the decline in oil prices (lower drilling activity affects employment and capital expenditures).
Yesterday was option expiration for February crude oil; it isn't uncommon to see sudden price spikes going into the pit close on expiration day, and that is exactly what we saw in afternoon trade. The massive short squeeze in oil helped to drag the stock indices higher, and eventually lead Treasuries lower.
Could this be the beginning of something bigger? We think so.
**Consensus:** We can't rule out a ridiculous route to 152'15ish; however, the best trade going forward is likely on the "short" side of the market. Could this be THE top?
**Support:** ZB : 146'21, 145'22, and 141'29 ZN: 127'31, 127'10, 126'12, and 125'13
**Resistance:** ZB : 150'21, and 152'15 ZN: 130'04, and 130'16Position Trading Recommendations
*There is unlimited risk in option selling
Short March 156 calls near 30 ticks
Long March 138 puts near 20 ticks.
ES holds trend-line support
The mid-1980s offered sharp technical support in the form of the multi-month up-trend line. Despite looking rather ugly yesterday morning, the e-mini S&P 500 managed to forge a rally from session lows. We'll know more in the coming days, but there are quite a few things lining up that point toward reversals in the financial markets. In other words, we could be in store for the dollar to finally reverse, Treasuries to fall back to more sustainable levels, stocks to resume the up-trend, and commodities (particularly crude oil) to find footing.
Yesterday afternoon's realization by investors that things aren't "that bad" was influenced by the Fed's Beige Book and a crude oil rally, but it will be up to the rest of this week's economic data to keep things moving in the desired direction.
h3 Stock Index Futures Market Ideas/h3**Consensus:** Assuming we don't get any fresh concerns in China or Europe overnight, it is likely we've seen the low of this move. 1985 support held well, we'll need to see a run to 2040-ish to confirm a resumption of the bull.
**Support:** 1985,1962, and 1913
**Resistance:** 2040, 2088, 2117, and 2131
Flat Day Trading Ideas
**These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled**
Sell Levels: 2022, 2040, 2051, and 2060
Buy Levels: 1975, and 1965
In other markets....
Disclosure and Disclaimer: Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. **Seasonality is already factored into current prices, any references to such does not indicate future market action.
**There is substantial risk of loss in trading futures and options.**
/h3
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