Rate-Cut Hope Surge: Futures at Highs as Oil Stumbles August 13 Trading Blueprint

Market Overview & Sentiment News

• Record highs on rate cut optimism: U.S. equity futures continue to trade near record levels after July's consumer price data came in cool, with interest rate futures pricing about a 98% chance of a 25bp cut at the Feds September meeting. The softer inflation print has investors firmly in riskon mode.
• Global markets rally: European and Asian equities also set new highs as mild inflation and resilient global growth boosted sentiment; Germanys and Japans indices are at multiweek peaks and the CBOE VIX has slipped to its lowest since January.
• Oil slides on supply outlook: Crude prices are under pressure after the International Energy Agency raised its supply forecast, projecting supply growth to outpace demand. Investors are also watching a U.S.Russia energy meeting; last nights API data showed a 1.5Mbarrel inventory build ahead of todays EIA numbers.
• Bondmarket calm: The Treasury bond volatility index (MOVE) has dropped to a threeyear low, indicating calm in fixedincome markets. The lower volatility helps loosen financial conditions and supports higher valuations for growth assets.
• AI caution amid earnings: While megacap tech names still lead the market, some AIlinked companies such as CoreWeave have posted disappointing results and share price declines, underlining the need for selectivity in the hot AI space.
• Other headlines: CoinDesk owner Bullish priced its IPO above range to raise more than$1billion, showing appetite for new issues; Asian export data remains solid, supporting industrial commodities.

Economic Calendar Analysis & Trading Plan

Wednesdays calendar features a cluster of medium and highimpact events. At 07:00ET the Mortgage Bankers Association releases its weekly mortgage rates, applications, and refinance indexes. These numbers can affect ratesensitive sectors and provide a read on consumer sentiment. Thirty minutes later, Richmond Fed President Thomas Barkin speaks, and traders will parse his tone for clues on policy. The U.S. Energy Information Administrations suite of petroleum reports at 10:30ET is the days biggest market mover for energy contracts; traders expect a modest draw after API reported a build. A 17week Treasury bill auction at 11:30ET could influence shortterm yields. In the afternoon, Chicago Fed President Austan Goolsbee (13:00ET) and Atlanta Fed President Raphael Bostic (13:30ET) speak. With ratecut bets elevated, any deviation from the dovish narrative could cause volatility.

Key takeaways for todays trading:

• 07:00ET MBA data: Equity traders should note that a sudden spike or drop in applications could influence yieldsensitive sectors. Consider entering long positions on dips to VWAP before the release, with tight stops; fade any kneejerk reaction back to VWAP.
• 07:30ET Barkin speech: Flatten positions or use tight stops ahead of Barkins comments. A dovish tone would reinforce the rally, while hawkish remarks could trigger a brief pullback.
• 10:30ET EIA oil reports: Crude traders should prepare for elevated volatility. Short rallies into the data if inventories are expected to rise; if the EIA reports a largerthanexpected draw, look to fade the initial bounce as supply still looks abundant.
• 11:30ET Treasury bill auction: Watch shortterm rates. A weak auction could lift yields and pressure growth stocks; a strong sale would support the ratecut narrative.
• Afternoon Fed speeches: Use the speeches by Goolsbee and Bostic as potential catalysts. If they echo Chair Powells commitment to data dependency and hint at cuts, consider adding to longs; any suggestion of patience could lead to profittaking. Keep risk light around the remarks.

Foundational Analysis

• Soft inflation supports policy easing: Julys CPI data confirmed inflation is moderating, giving the Fed room to cut rates. This underpins bullish expectations for equity futures and lowers discount rates for growth stocks.
• Oil oversupply persists: The IEA projects that global supply will outpace demand in the second half of the year. Combined with last nights API inventory build and expectations for a similar EIA print, this strengthens a bearish bias on energy futures.
• Global demand resilience: China and other major exporters have reported strongerthanexpected exports, highlighting resilient global demand. This supports industrial and commoditylinked futures despite U.S. recession fears.
• Tech leadership with pockets of caution: Largecap tech remains the markets backbone thanks to robust earnings, but some AI and cloud names have disappointed; investors should be selective and employ VWAPbased entries.
• Low bond volatility: The MOVE index near a threeyear low indicates stable bond markets and encourages leverage and risktaking, aiding momentum in equities.

Technical Analysis

• ES (S&P 500 futures): Overnight trading has kept ES above its session VWAP near 6,417. Price is consolidating around 6,448. Look to buy dips to 6,4256,435 with stops below 6,410, targeting 6,4606,480.
• YM (Dow futures): YM is trading around 44,818 and comfortably above its VWAP near 44,600. Scale into longs on pullbacks to 44,65044,700, placing stops under 44,500 and aiming for 44,85044,900.
• NQ (Nasdaq 100 futures): NQ holds above its VWAP near 22,900, with price near 23,040. Use VWAP retests at 22,92522,975 for long entries, with stops below 22,850 and targets at 23,10023,150.
• RTY (Russell 2000 futures): RTY is hovering near 2,280 and slightly above its VWAP around 2,275. Maintain a bullish bias; buy dips near 2,2702,275 targeting 2,2852,300, with stops under 2,260.
• GC (Gold futures): Gold is trending above its VWAP around 3,340 and trading near 3,360. Consider longs on pullbacks to 3,3453,350, targeting 3,3703,380 with stops below 3,330.
• CL (Crude oil futures): Crude is below its session VWAP near 83.00, trading around 82.00 after a sharp overnight drop. Look to short rallies toward 82.8083.20, keeping stops above 83.60 and targeting 81.5082.00.
• Overall themes: Equity futures are trending higher with support at VWAP levels, gold is firm as a hedge, and crude oil weakness offers shortside opportunities. Use disciplined VWAPbased entries and exits.

Todays Strategy for Scalpers & What to Watch For

• Mortgage data scalp: Trade the 07:00ET MBA release by scalping around VWAP. Fade any overextension in ratesensitive futures back to prerelease levels.
• Barkin & afternoon speeches: Listen for hints on monetary policy. Scalpers can lean long on dovish commentary and quickly reverse on any hawkish surprise.
• EIA crude reaction: Expect volatility around 10:30ET. Sell spikes into VWAP if inventories build; take quick profits on shorts as the market digests the data.
• Follow global momentum: Asian exportdriven momentum may support industrial and commodity futures. Look for confirmed breakouts on volume.
• AI and tech: Monitor consolidation patterns in AI chip leaders like Nvidia; use VWAP retests for precision entries, keeping size small due to elevated valuations.
• Hedging plays: With yields fluctuating around speeches and auctions, hedge long tech exposure with short positions in bondsensitive futures.
• Use a Virtual Private Server: With QuantVPS, execute trades with sub1ms latency.

What Could Happen After Market Open

• Surgefade pattern in equities: The recordhigh environment suggests an initial surge after the mortgage data could be followed by a fade; watch the S&P VWAP for support.
• Energy volatility: EIA inventory results may trigger extended weakness or a relief bounce. Monitor crude VWAP for short setups and possible reversal points.
• Industrial followthrough: Improved Chinese exports could drive followthrough buying in industrial and commoditylinked futures above premarket highs.
• Midday speeches as pivot: Comments from Barkin, Goolsbee and Bostic could generate direction changes. Define stops ahead of each speech and be prepared for whipsaws.
• Bill auction impact: A strong 17week Tbill auction may support riskon sentiment; a weak one could cause yields to spike and weigh on growth stocks.
• Latesession volatility: With little scheduled after Bostics speech, watch yield pivots and sector rotations for additional opportunities, especially if market internals diverge.

Summary

With July inflation cooling and traders almost fully pricing a September rate cut, equity futures are trading near record highs and risk appetite is strong. This optimism is tempered by softness in the energy complex, where the IEA projects supply growth will exceed demand and inventories are rising. Global markets are broadly higher on resilient economic data, and bond volatility is at multiyear lows, underpinning valuations. However, selective exposure is key as some AI and cloud names have disappointed. For today, scalpers should focus on fadeandretest setups around the mortgage data, Fed speeches and EIA inventory release, while holding a bullish bias toward equity futures and a bearish tilt toward crude oil. Staying nimble and managing risk will be essential as the days events unfold.