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Break and Go

Welcome to 2020 or will we say deja vu 2019? Stock index futures markets are in full blown BULL mode. This Break and Go pattern has been repeating itself for quite some time now. Much to the consternation of the allusive and soon to be extinct “Counter Trend Trader”.

Infinity Futures
Source: #ATCharts

And it is no coincidence that we have a very high correlation between the low 0% interest rate policy set by the FOMC as well as Fed action with respect to QE and recently the reemergence of injecting liquidity in the form of REPO’s (among other things) for the prime banks. For like the last DECADE.

Infinity Futures
Source: St. Louis Fed

If you check the CME groups FedWatch probability tool, you'll see that we're looking at maintaining the status quo and interest rates and maybe even lowering them from a statistical point of view. The tool is forecasting the probability of Fed Fund target rate to remain the same (50%) or be lower (50%) by NEXT Christmas. No Paul Volcker (RIP) tractor races in DC this year!

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Source: CME Group

In my view this will not change this year. Yes we will have some price shocks and channel breaks or you could call them dislocations, I simply would like to refer to them as buying opportunities.

So, in my opinion 2020 will be a repeat of 2019. Maybe we won't have another 22% increase in stock index futures but maybe it'll only be 16% as some other analysts have suggested. Don’t let the VIX or lack thereof convince you that stock index market opportunities have dried up - that's simply not true. In any event break and go and by the dips.

P.S. I am not worrying about the U.S. election until I have to worry about it. In NOVEMBER.

Day traders should come to one our Infinity webinars where we somewhat scientifically look for these price levels. See our schedule here: https://www.infinityfutures.com/webinars.aspx