Earnings season gets into full swing this week after a few notable companies released their quarterly results last week. This week promises to be much different, though, as quite a few large cap companies in the S&P 500 index are scheduled to report earnings in the days ahead.
Now why does a commodity trader care about earnings?
To start, the results will affect movement in both S&P and Nasdaq futures. It also gives traders a read on the mood of the country, how consumers are spending and how companies are preparing to move forward. In my opinion, all of will can effect prices and demand for commodities.
On Tuesday, home builder Lennar will make an earnings announcement. Look for copper to react to the results. The focus will then shift to the banks Goldman Sachs and M&T Bank scheduled to report on Wednesday, Bank of America set to deliver earnings on Thursday and an earnings report from Morgan Stanley on Friday. Elsewhere in the market, American Express will report on Thursday and General Electric to announce its quarterly results on Friday.
Bank earnings are expected to be OK, but with all the stimulus going on, I am not surprised by that. Record amounts of money have been flowing into mutual funds and confidence seems high, but with the debt ceiling debate firing up and earnings reports so far mixed at best, I think the market will have a hard time holding onto the gains that it's made since January 1.
As it stands now, the S&P is up against some major resistance and up against 5 year highs at 1,472.12. The March E-Mini contract shows resistance at 1,474 and 1,483 with support levels at 1,450 and 1,428.
As we find ourselves deep into the winter, it is becoming increasingly clear that we are not getting the cold weather and the demand that comes with it to push natural gas higher.
(Read More: Nat Gas Rally About to Deflate: Pros)
That is why for the Feb contract I am a seller, we could see a 2 dollar handle when Feb expires on Jan 29th.
(Read More: Natural Gas Could Be Bigger Than the Internet: Welch)
Here are the facts behind the reasoning, Last week on "Futures Now" I said I thought natural Gas which was trading at 318 would get back to the 332 area, well it went to 335 and then failed miserably.
We just went through the warmest summer on record and natural gas never rose above the 350 level. The outlook for temperature in the northeast for the next 3 weeks is projected to be above average, the demand in this moderate winter won't match the summers, in fact in the last two months, supplies have risen from 8 percent higher year on year to 13 percent higher.
(Read More: Iuorio: What You'll Want to Own in 2013)
Natural gas is not affected by geo politics, it is a domestic market, we cannot export at this time significant amounts, so whatever is produced, and its more every day, stays here. That is why from now till the end of the month I am a seller of rallies in natural gas, if it rises to 330 -335 sell it. and look for 285.
With gold hovering near a four-month low, even some of the yellow metal's most ardent fans have begun to sweat.
Just don't count Euro Pacific Capital's Peter Schiff among the Nervous Nellys.
The perpetual bullion bull and sworn enemy of central bankers everywhere told CNBC's "Futures Now" this past week that gold's recent sell-off is only temporary and that investors should be "patient enough to ride this thing out."
Gold, he said, is one of the few avenues available to investors as a store of value in a world where major central banks are determined to fight economic weakness with ultra-accommodative monetary policy.
"What are you going to do? You're going to hold dollars at zero percent with (Fed Chairman) Ben Bernanke promising to print until infinity?" the fierce Fed critic asked. "There's no currency that you can hold and be confident inits future purchasing power. But you can hold gold, you can hold silver."
Schiff added that people "could make a lot of money in gold and gold stocks if they are patient. But unfortunately there's money on Wall Street that's not patient, and I advise other people who understand the fundamentals" to stay put, he said.
Earlier in the week, noted gold bug Jim Rogers sounded a rare note of caution as gold suffered its deepest weekly loss since June.
Meanwhile, well-known investor John Paulson — whose flagship investment funds have had a brutal year – saw falling bullion take a toll on his gold fund, which has fallen 21 percent year to date. (Read more: John Paulson's Hedge Funds Weather Another Tough Month.)
Schiff said people originally invested with Paulson because he once had a "hot hand." Now, impatient investors are heading for the exits "because they don't understand the dynamics behind the market," he said.
The Federal Reserve, fresh off its announcement of a third round of bond buying, may already be laying the groundwork for a fourth, a market analyst told CNBC "Futures Now."
With uncertainty over taxes and spending at the fore of consumers' minds, "the stars are aligned" for the Federal Reserve to prepare markets for a fourth round of quantitative easing, said George Goncalves, head of US rates strategy at Nomura Securities.
"They do want to keep the easing train going," the analyst said, especially as they wrap up their "Operation Twist" policy selling short-term debt in an effort to depress long-term interest rates.
"They are probably going to start expanding their balance sheet and we think it does make sense to start calling it QE4," Goncalves added.
Few analysts expect a dramatic pronouncement from Wednesday's Federal Open Market Committee meeting. Still, Goncalves said the central bank may use the opportunity to "tweak" its guidance on the duration of the massive bond-buying in which they've been investing as part of QE3. (Read more: QE3 Will Not Help US Consumers or the Jobless: Roach.)
Gold, which plunged Tuesday to its lowest level in a month, could see a deeper decline that may cause the precious metal to revisit the year's low, a veteran trader told CNBC "Futures Now."
Rich Ilczyszyn, founder and chief market strategist at iiTrader, said that bullion's close below $1,700 sent a bearish near-term signal.
Yet the news gets worse for gold bulls. According to the trader, gold could see an even sharper drop. The tense negotiations in Washington over the "fiscal cliff" could send investors fleeing for other perceived safe havens, he said.
"If we do go off the fiscal cliff, we could actually see a sharp selloff in gold as people run out of everything, which they've done in the past, and go into the dollar and Treasurys short-term," Ilczyszyn said. "We could drop another couple of hundred bucks potentially in gold, back to that year's low of $1,530."
The precious metal has surged in the wake of massive bond-buying from the Federal Reserve, which critics say will eventually spark a precipitous rise in inflation and a drop in the dollar. Gold is used as both a hedge against inflation, and a haven from uncertainty. (Read More: Think Gold's Pricey Now? Wait Until It Hits $5000: Schiff.)
Yet investors have scattered amid political wrangling between the White House and Congress over looming tax hikes and spending cuts that are set to take place in January. Mass liquidation from large funds sent to drop past $1,700 on Tuesday, a key technical and psychological barrier watched by many analysts.
It's time to hedge my stock portfolio. The futures market is a great place to help reduce overall market risk, and I want to protect my downside risk in equities for the next 30 days.
The price of gold fell sharply Wednesday, marking its biggest one-day drop in three weeks, but some professional traders remain bullish on the precious metal.
From the floor of the New York Mercantile Exchange, trader Anthony Grisanti said he likes gold for several reasons. To start, he pointed out that the price of gold fell after a single customer sold 15,000 contracts of gold as soon as the market opened Wednesday.
"Let me put that in context — we've already done, by 10 o'clock this morning, the volume we usually do in gold for a day," said Grisanti, founder and president of GRZ Energy. "These weren't new shorts coming into the ring. These were longs that were liquidating. Profit taking."
Grisanti also still likes gold's technical indicators, noting that despite the selloff, it has held support levels near of the lows of $1,703.
The possibility of the U.S. curbing mortgage interest deductions could prompt a sea change from buying houses to renting, influential economist Robert Shiller told CNBC's "Futures Now" on Tuesday.
As part of the reform proposals being discussed in a possible deal on the "fiscal cliff", some have advocated eliminating or reducing the mortgage deduction – one of the tax code's most cherished provisions offered to home buyers at all income levels. (Read More: Mortgage Interest Deduction, Once a Sacred Cow, Is Under Scrutiny.)
"This sudden attack on the mortgage deduction is news," the Yale University economist and housing expert told "Futures Now."
"I think five or ten years ago, we would have thought it impossible, so there wasn't any risk of this elimination priced into the market until now," he added.
Policymakers have just weeks to avert the "fiscal cliff" — a series of measures that, if unchanged will result in tax increases and spending cuts on Jan. 1, and professional traders can't agree on whether Washington will reach a compromise in time.
From the floor of the New York Mercantile Exchange, trader Anthony Grisanti said Tuesday he's optimistic lawmakers will meet the deadline to solve the nation's fiscal woes.
(Read More: What Is the Fiscal Cliff?)
"Call me naïve, but I do think a deal gets done," said Grisanti, founder and president of GRZ Energy. "I'm putting my faith in these representatives that they will get a deal done by the end of the year."
In turn, Grisanti said he's getting short bonds and selling 10-year Treasury bonds in particular. He sold the 10-year bond at $133.20 with a stop at $134 and a price target at $132.20. If there is a deal, though, he will adjust his target because he thinks T-bonds have more room to the downside.
Don't believe the hype: drop it like it's hot. When it comes to oil, sell the news.
Rumors of a cease fire in the Israel-Gaza conflict dropped West Texas Intermediate crude oil over 3 percent percent midday Tuesday. This despite the fact that very little oil is produced in the conflict area. Why, then, does oil respond to Israel-Gaza news? Well, the concept is that other factions could be pulled into the conflict as the situation potentially escalates. Nations that actually do produce oil could thus become affected.
Let's look at the broader situation for oil, however. The oil market as a whole is well-stocked. In fact, here in the U.S., stockpiles are at four-month highs. And demand for oil in Europe, Asia and the U.S. is relatively weak.
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