What’s On Tap for Traders: April 17-21

We’re coming off an exciting week of trading with a cool CPI report, a more cautious Fed, and some upside earnings surprises from the banks. Now let’s look at what’s ahead this coming week. Click this image for a quick look at what’s on the calendar: (click to enlarge) Tech Earnings Season Begins With Netflix and Tesla Tech is outperforming big time in 2023, with the QQQ’s up 18.6% vs. a 7.3% gain for SPY: As of Friday at 1:30 p.m. ET But the scales may tip with Netflix (NFLX) reporting earnings on Tuesday. T3 Live Chief Strategic Officer Scott Redler notes “It’s hard to be long or short Netflix into earnings given how far it’s come. It’s been a real leader over the last quarter, so it will give traders a good gauge on tech stock sentiment.” Tesla (TSLA) follows on Wednesday. Dan Darrow of T3 Live’s Alpha Team VTF® tells us “Tesla’s earnings will be must-see TV. April deliveries were disappointing relative to high expectations, and it will take a strong report and guidance to break the stock out of its 2-month trading range.” FYI: Dan will join Greta Wall for a LinkedIn Q&A this Wednesday. Click here to sign up! Given Elon Musk’s chronic inability to stay out of the news, the world will be watching this show. Semiconductor investors will want to keep an eye on ASML Holding (ASML) and Lam Research (LRCX) on Wednesday plus Taiwan Semi (TSM) on Thursday. The VanEck Semiconductor ETF (SMH) is up a whopping 22.9% YTD to top our ETF leaderboard: Click to enlarge As of Friday at 1:30 p.m. ET Micron (MU) rallied after a horrible quarter, so we’ll see if the “it can’t get any worse” semi rally extends into Q2. Positions Disclosure: Scott Redler and Dan Darrow’s positions as of 2023-04-14 at 1.26.32 PM (Click to enlarge) Even More Bank Earnings: Schwab in Focus Bank earnings were on the strong side Friday, with JP Morgan (JPM) surging higher: We’ll get even more this coming week. Schwab (SCHW) is a big one to watch on Monday. We all know Schwab as a major broker and asset manager, but the company’s bond market losses got it caught up in the regional bank meltdown, and the stock’s been a mess: Traders and investors are eager to see the impact on Schwab’s financials. The options market is pricing in a ~9% move in SCHW next week. Given the uncertainty, we could see such a move. Other bank reports to watch: Monday: State Street (STT) Tuesday: Bank of America (BAC) and Goldman Sachs (GS) Wednesday: Morgan Stanley (MS) and US Bancorp (USB) Thursday: American Express (AXP) A Light US Economic Calendar The US economic calendar lightens up a bit this week. We’ll have Building Permits on Tuesday followed by the Philly Fed and Existing Homes Sales numbers on Thursday. Traders will be looking for more signs of a slowdown to get a better read on the Fed and monetary policy. Overseas Is Busier The global calendar has a lot more happening, especially on the inflation front. We have CPI readings on Tuesday (Canada) and Wednesday (England, Eurozone, New Zealand). Inflation seems to be cooling worldwide so we’ll see if the trend continues. Plus, China reports GDP and Industrial Production numbers late Monday. And on Friday, we’ll get England and Canada’s Retail Sales numbers. Sentiment Is Still… Confusing: The AAII Sentiment Survey shows that just 26.1% of investors are bullish, well below-the long-term average of 37.5%. That’s down from 33.3% last week: According to AAII, “bullish sentiment remains below its historical average of 37.5% for the 71st time out of the past 73 weeks.” Pretty bearish… right? Yes. But CNN’s Fear & Greed Index shows that traders are greedy: Permabulls always say everyone’s bearish. Permabears always say everyone’s bullish. The truth is somewhere in the middle… Video of the Week David Prince of Inner Circle talks to Jesse Martin, winner of two World Series of Poker Gold Bracelets and the 2019 $2 Million DraftKings Fantasy Football World Championship. Jesse is an IC member and shares how high-stakes poker trained him to succeed in the markets. Momentum Mastery Is Coming… JR Romero, Head of T3’s Newsbeat Program, is teaching his all-new Momentum Mastery Course LIVE. Want in? Contact Amber Buchetto for details. What did you think of this article? Let us know in the comments!

VIX Explosion Confirmed: Here’s What’s Next

On November 29, Jeff Cooper said the VIX would explode, and it did: And just yesterday, Jeff initiated a position in IWM December $162 puts. He just locked in a 29% gain on half the position — in 1 day! He also went long TZA which is up 5%. Click here to get his next trade! ******************** My December 3 date hit and the market broke (1 day early). I have been looking for a turn in the markets in early December because of 3 factors,. 1) 180 days/degrees from the Dec 3, 2018 pivot was the big June 3, 2019 low. That low (2729) perpetuated a 425 point jagged march to last Wednesday’s all-time high. Another 180 days/degrees from the June 3 low is December 3. 2) At the same time last in last Wednesday’s report we wrote: “The SPX struck a magic Gann level yesterday. This is 56 squared, which is 3136. Allow me to explain. You see, W.D. Gann was the first to recognize that panics often begin from around the 56th day from an important high or low. Two of the biggest examples are the 1929 crash which occurred around 56 days from high. Ditto the 1987 crash. The same has been true of blow-off tops culminating around 56 days from a pivot low.A good example is the final run into the October 11, 2007 top that started from an August 16 pivot low.” We went on to give several other examples. 3) Additionally, we flagged the remarkable synchronicity last Wednesday was the 56th calendar day from the October 3, 2019 low. In league with this time and price synergy, a VIX Volatility Explosion signal was on the table and we did a video walking through the setup. On Monday, the Volatility Index, the VIX, surged 21% intraday. On a closing basis. it was the largest single day percentage rise in over three months. Breadth closed with 788 advancers on the NYSE versus 2122 decliners. Monday morning’s report showed the setup of what can happen when an item, in this case the DJIA, is stretched above its 200 day moving average. One thing we know about price is that it is mean reverting. On Monday, that mean reversion hit with authority. Growth glamours hit an air pocket. My 4 Horsemen stumbled: MDB tanked 11 COUP shed 5 points OKTA sank 8 TTD plunged 36 points A daily SPX below shows the nasty Trap Door setup: 1) A high tick close on Wednesday 2) Up open overnight on the futes despite Trump signing bill in support of Hong Kong protestors 3) Small green on Monday’s open 4) Plug gets pulled to start the new month So where can the SPX go? While the DJIA closed below its 20 day moving average on Monday, signaling the minimum potential for a 1000 point/one month decline, the SPX tested its 20 day yesterday. That 3107 level where the 20 day resides is set to be snapped on a gap this morning. 90 degrees down from the 3154 high is 3098. 180 degrees down is 3042 — near the 50 day m.a. 270 degrees down is 2987 — near a 50% retrace of the rally. 360 degrees down is 2933 — near the 200 day m.a. With 2993 being 90 degrees square the October 3 low, the implication is that the path of least resistance is toward the 2933 to 3000 region, as long as we get sustained follow through below the 20 day moving average. Green arrow is October 3. Purple arrow is 993 for 2993 (in the outer rung) Notice the square out with the end of the year where the upthrust occurred in 2018. Just when the vast majority of market participants were convinced of a continued run up into year end, it looks like Mr. Market staged an ambush. Just when it looked like a mirror image of the decline from October 3, 2018 indicated an advance through year end, and that a repeat of 2018’s Christmas Massacre was off the table, unrealized gains are vulnerable. Yesterday is a good example of air pockets resulting from profit taking when buyers have their wallets on their hip on the first day down. Conclusion. Even in a bullish pullback, a 180 degree correction can play out. This is the 3042 region, which ties to the breakout point. Even in a bull market, the normal expectation is for the breakout point to be backtested. However, breakage below 3140ish suggests a larger top is in. Moreover, the action we are seeing this week is indicative that the back of the runaway move is broken, regardless of whether the recent runaway train turns into a sleigh ride from hell or not. Position in IWM puts, UVXY, UVXY calls

74% of Surveyed Traders Bullish on NVDA in Our Latest Mystery Chart Challenge.

==> Sponsored by the T3 Live Black Room – Click to Join Our FREE Open House Yesterday, we held our second Mystery Chart Challenge, which is our version of a classic blind taste test. It’s your job to analyze the chart without the influence of knowing the ticker. Here’s the chart we showed: And as you can see in the title of this article, it’s Nvidia (NVDA):   Only 2 respondents guessed it right, and a third was awfully close in guessing Advanced Micro Devices (AMD). And how do surveyed traders* feel about Nvidia, based on the blank chart alone? *this is NOT some kind of scientific sample and we can’t promise any statistical significance, so please take these numbers with a very large grain of salt Very positive, as it turns out. 73.7% said they were bullish based on the chart along. 15.8% said they were bearish. And 10.5% were in the middle! Stay tuned for our next Mystery Chart Challenge! To ensure you get notice to participate next time, sign up for our free newsletter here.

Mystery Chart #2: Are You Bullish or Bearish?

==> Sponsored by the T3 Live Black Room – Click to Join Our FREE Open House It’s been far too long since we’ve issued a mystery chart challenge! This is our version of a classic blind taste test. Here’s how it works: We’re giving you a 6-month daily chart with 10/20/50/200 day moving averages, and no name. It’s your job to analyze the chart without the influence of knowing the ticker. Last time, 179 people participated… and a lot of them were angry to find out they were bullish on the gold miners (GDX). Here’s the latest mystery chart for you to analyze: Are you bullish or bearish? Enter your vote below, and guess the ticker if you dare. Make sure you hit the submit button so we can log your entry. Tomorrow, we’ll reveal which chart this is, and post the results. Good luck! Loading…

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T3 Live’s Mystery Chart #1 Revealed!

Yesterday, we played a little game. We posted this mystery chart, and asked traders whether they were bullish or bearish on it, and to guess the ticker: Before we reveal the answer, let’s see whether traders were bullish or bearish on this particular ticker: 52.7% were bullish, 30.4% were bearish, and 16.9% were in the middle. And the ticker is… GDX! 7 people guessed it right in our survey (and even more did on Twitter). A few other traders were close, guessing other gold instruments like GLD and NUGT. So what do you think? Should we do this again next week? Let us know in the comments!

Are You Bullish or Bearish on This Mystery Chart?

UPDATE!: We revealed the mystery chart here. Hi all! We’re doing a little experiment here. Here is a year-to-date daily chart of a mystery stock. Are you bullish or bearish on it? Scroll down to cast your vote, and guess the ticker! (only 3 people have it right so far…) Loading…

Sentiment Report: Traders Are Still Scarred Up from the February Collapse

The market’s been up for 5 of the past 6 days. So do traders believe the February volatility spike is behind us? The numbers say no. While the overall mood is improving, traders have not become positive. They’re actually leaning neutral to slightly bearish. This implies that the recent downturn left some scars… and perhaps that means there’s upside fuel still on the sidelines. Let’s go through our sentiment indicators so you can see what I mean. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Neutral On Tuesday, February 6, the VIX hit a multi-year high at 50.30. Then it slowly drifted back into a more “historically normal” range between 16 and 20. Following the better-than-expected jobs report on Friday morning, it fell as low as 13.31, a level not seen since February 1. The VIX curve spent much of February inverted, but now it’s normalizing. The 3-months spread is around +2.00, which is neutral. Traders are clearly scaling back their expectations for volatility as markets climb, which isn’t at all out of the ordinary. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 25, which up from 8 last week. This index operates on a 0-100 scale, and a reading of 25 means traders are fearful. So traders are fearful, but less so. 3) AAII Sentiment – Bearish The American Association of Individual Investors said that just 26.4% of individual investors are bullish. This is a major decline from from 37.3% last week, and it’s the lowest reading since August 31, 2017. it should be noted that individual investors tend to lag the market — it takes them a while to get more bullish when the market’s rising, and longer to get bearish when the market’s declining. 4) CBOE Equity Put-Call – Neutral The newest reading of the CBOE equity put-call ratio is 0.61. This is the fourth straight number under the 0.654 long-term average. The 10-day moving average is now 0.62, which is slightly below that long-term average. Options traders were insanely bullish from December through early February. Then they got incredibly bearish as markets started breaking down. Now they’re looking neutral to modestly bullish. Conclusion Out of 4 sentiment indicators, we have: 0 bullish (down from 1 last week) 2 neutral (up from 1 last week) 2 bearish (flat from last week) Sentiment is still looking neutral to modestly bearish. Traders are clearly in a much better mood than they were at the February 9 low, but they’re not quite buying in whole-hog just yet. It may take a break above the February 27 interim high at 2789 to get traders convinced we can head back to all-time highs: The market’s been up for 5 of the last 6 days. That’s nice to see. And it’s even nicer to see that traders haven’t gone bullish. This implies that there are still people on the sidelines who can pile into the market. In particular, there seems to be a lot of doubt among individual investors, who tend to lag the market a bit. Typically, they take longer to get bullish when the market goes up. So perhaps that means we have more room to run from here.

Sentiment Report: Are There Still Too Many Bulls?

Last week, the market was in the most boring position possible. Stocks were consolidating and sentiment looked just a tad bearish. So there was no extreme in the technical position of the markets, and  no extreme in sentiment either. That mad it hard to have a firm opinion on where things could go. We started the week on a happy note, before the bears took control and put in 4 straight down days. So let’s take a look at our sentiment indicators to see if the bulls are freaking out. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish On Tuesday, February 6, the VIX hit a multi-year high at 50.30. Then it slowly drifted back into a more “historically normal” range between 16 and 20. But it’s hovering around 25 on Friday as the fear gets ratcheted up. The VIX curve is still inverted, with a 3-month spread around -6.00 This means traders are still pricing in significant volatility, which makes sense. Ever since volatility exploded in early February, we’ve seen a huge expanion in range. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 8, which is dowm from 15 last week. This index operates on a 0-100 scale, and a reading of 8 means traders are very fearful (or bearish). 3) AAII Sentiment – Neutral Sentiment among individual investors is turning. The American Association of Individual Investors (AAII) said that 37.3% of individual investors are bullish, according to their latest survey. This is a substantial change from last week, when 44.7% of investors were bullish. The long-term average is 38.4%, so 37.3% is more or less neutral. 4) CBOE Equity Put-Call – Neutral The newest reading of the CBOE equity put-call ratio is 0.72. The 10-day moving average is now 0.623, which is slightly below the long-term average of 0.654. Options traders were insanely bullish from December through early February. Then they got incredibly bearish as markets started breaking down. Now they’re looking modestly bullish. Conclusion Out of 4 sentiment indicators, we have: 1 bullish (flat from last week) 1 neutral (flat from 0 last week) 2 bearish (flat from 3 last week) Sentiment is still modestly bearish. I’d argue that it’s just a little more negative than last week, and certainly not indicative of panic. This is good for the bears. If the market keeps declining, there are still plenty of bulls that can be turned bearish, which could mean more negative selling pressure. The bears should be most excited about the CBOE equity put-call ratio, which indicates a lot of call option demand over the past couple of weeks. Typically, we see very bearish CBOE equity put-call reading around market bottoms, and we’re not even close to that. I’d like to see a 10-day moving average above 0.7, and a 1-day reading over 0.8. An extreme 1-day reading sometimes marks short-term capitulation. Unfortunately, we won’t have Friday’s reading until the evening. So I’ll keep everyone posted Monday morning to see if things change.

Sentiment Report: Volatile Markets, Neutral Traders

In last week’s sentiment report, traders were somewhat fearful, even with stocks rising like a phoenix off the February 9 low. Since that low, we had: -6 straight days up with markets finishing near the highs each day -2 down days -1 anemic up day with a finish near the day’s lows So let’s measure how traders are feeling in this new age of volatility. (click here for a primer on the sentiment indicators below) 1) VIX Spread – Bearish On Tuesday, February 6, the VIX hit a multi-year high at 50.30, and it’s slowly drifted back under 20, which puts it within range of historical norms. The VIX curve is still inverted, with a 3-month spread around -1.5. This means traders are still pricing in significant volatility, which makes sense. Ever since volatility exploded in early February, we’ve seen a huge expansion in range. (click here for a primer on the VIX spread) 2) CNN Fear & Greed Index – Bearish The Fear & Greed Index is at 15, which is flat from last week. This index operates on a 0-100 scale, and a reading of 15 means traders are very fearful (or bearish). This is a shocking change. Fear & Greed was at 76 just a month ago. 3) AAII Sentiment – Bullish The American Association of Individual Investors’ Sentiment Survey shows that 44.7% of those surveyed are bullish. This is down 3.8% from last week’s 48.5% reading. The long-term average is 38.4%, so we’re back in bullish territory. But keep in mind that AAII sentiment tends to lag the action a bit. It was pretty neutral for most of 2017, even with markets hitting one record high after another. 4) CBOE Equity Put-Call – Neutral The long-term average of the CBOE equity put-call ratio is 0.63. The 10-day moving average is now 0.662, which is basically in-line with the long-term average of 0.654. Options traders were insanely bullish from December through early February. Then they got incredibly bearish as markets started breaking down. Now they’re looking neutral. Conclusion Out of 4 sentiment indicators, we have: 1 bullish (flat from last week) 1 neutral (up from 0 last week) 2 bearish (dowm from 3 last week) Ack! We’re in the most boring positions possible. Stocks are consolidating and sentiment looks just a tad bearish. There’s no extreme in the technical position of the markets, and there’s no extreme in sentiment either. That makes it hard to have a firm opinion on where things can go from here, but here’s an ideal possible scenario for the bulls. We keep bouncing sideways for the next month or so, perhaps between 2660 and 2760, with several breakdowns and breakouts that don’t have follow-through. If that happens, perhaps bearish sentiment will build up to provide the market with upside fuel for a breakout back towards the 2872.87 high. On the flip side, the best scenario for the bears would be a slow, ugly descent before a major break below the SPX’ 200 day moving average, which was lost and then quickly reclaimed on the big 2/9 rebound day. Here’s an SPX chart laying out these levels: Another thing to wonder about is whether we’ve set a higher baseline range for the VIX. As you can see, it spent an awful lot of time between 9 and 15, which was outrageously low. It will be interesting to see if traders price in a “closer to normal” range for expected volatility. (Related: Primer on the VIX)