Saturday, March 13, 2010

US Economic Insight of Federal Express and the Federal Open Market Committee

Trading ranges on crude, unleaded gas, and heating oil futures have been narrowing for the past several weeks indicating traders are unwilling to bet heavily in either direction on the next move for the energy complex. Crude bulls made a valiant effort to take out January highs on Friday hitting an intraday high of 83.13, but were rejected by "da bears," confident that energy has had a nice six week run and needs a healthy pull back. Comments next week from the Federal Open Market Committee and the Federal Express conference call need to be listened to closely to understand where the US economy is likely headed.

When markets consolidate, as we have seen the past few weeks in both energy and equities, short and long traders begin getting nervous that either profits have run their course or losses will begin to mount. Putting on new trades or offsetting open trades are not wise until the congestion has cleared and market direction reasserts. Next Tuesday traders will likely receive market moving guidance from the Fed. Interest rates are unlikely to change. However, comments from the Fed Chairman will give better insight as to how well the US economy is improving.

Along with a slew of economic data to be released next week, Federal Express will be broadcasting their quarterly investor conference call. Not only is this company a bellwether for the US economy, the President, Frederick Smith, is a Yale graduate with a degree in economics. Listening to a Federal Express conference call gives valuable insight into the real state of the US economy.

The energy and equity markets feel top heavy, overbought and ready for a decline, but the FOMC and Federal Express may give the bulls the ammo they need to keep charging higher.

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