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Vintage Wall Street: The Paul Tudor Jones Documentary ‘Trader’
Paul Tudor Jones, founder of Tudor Investment Corporation, is one of the greatest traders of all time. Jones has amassed billions of dollars in assets under management and personal net worth trading everything from futures to currencies to commodities. In the 1987 documentary Trader, PBS takes us inside Jones’ world of high-stakes, practically 24/7 trading. In it, you’ll learn: Why like our own Scott Redler, Paul Tudor Jones wakes up so early in the morning Just how quickly Jones can change his mind in the heat of the moment The awesome-at-the-time-but-horrible-now fashion choices of 80’s Wall Street giants. If you’re interested in learning about Jones’ trading style, we suggest you watch the embedded YouTube video — complete with Russian subtitles — above now. When it does surface online, it tends to disappear due to copyright claims. Interestingly, in the 1990’s, Jones requested it be removed from circulation, possible because it revealed too much about his trading style.
Continue Reading -->Weekly Sentiment Update: That Is a Moderate Bull I See!
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side provides evidence for their views. So let’s see how traders are feeling into today’s inauguration: 1) VIX Spread – Bullish The 3-month VIX spread is at +3.65, which indicates traders are not very concerned with volatility This is a bullish reading. 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 80. F&G operates on a 1-100 scale, and 80 is in extreme greed territory. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 33.1% of individual investors are bullish, which is below the long-term average of 38.5%. This indicator is slightly bearish. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio is at 0.58 with a 3-day moving average of 0.57. This indicates higher-than-average bullishness. 5) ISE Sentiment – Bearish The ISE Sentiment Index is at just 85 (85 calls for every 100 puts) this afternoon – which is a bearish reading. And the 10-day moving average is 77.3. This also indicates bearish sentiment. Conclusion Out of 5 sentiment indicators, we have 3 bullish and 2 bearish. Interestingly enough, the VIX spread has contracted from 5 to 3.65 over the past week, which implies that options market players are backing off their bullish bets a bit. And the ISE Sentiment Index implies that traders are still buying plenty of downside protection, though to be fair, that indicator seems to be losing predictive value. This could be because of Trump-related uncertainty. So overall, traders appear moderately bullish.
Continue Reading -->Russell 2000 Hits Record Highs, May Be Ready for a Breakout
The Russell 2000 just made a new all-time high, matching last week’s records in the SPX, Dow, and Nasdaq. In doing so, it is above this little 1385-1390 range at which it failed 3 times in a row: We can also view those 3 failures as top points of a descending trendline: I’d keep an eye on it to see if it can keep moving with authority above 1400. Round numbers are meaningless for judging direction but 1400 is just enough above the recent range to judge this extension Yellen’s testimony may be key tomorrow. If she’s hawkish, that could help the Russell bust a power move higher since a strong dollar is generally better for small caps than large caps.
Continue Reading -->Weekly Sentiment Update – Traders Actually Look Bullish!
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side provides evidence for their views. So let’s see how traders are feeling into today’s inauguration: 1) VIX Spread – Bullish The 3-month VIX spread is at +5, which indicates traders are not concerned with volatility. This is a bullish reading. 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 67. F&G operates on a 1-100 scale, and 67 indicates that traders are moderately bullish. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 35.8% of individual investors are bullish, which is below the long-term average of 38.5%. This is basically neutral. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio is at 0.69 with a 3-day moving average of 0.73. This indicates higher-than-average bearishness. 5) ISE Sentiment – Bearish The ISE Sentiment Index is at just 85 (85 calls for every 100 puts) this afternoon – which is a bearish reading. And the 10-day moving average is 79.2. This also indicates bearish sentiment. Conclusion Out of 5 sentiment indicators, we have 2 bullish, 1 neutral, and 2 bearish signs. Now this seems neutral, but I’d argue that traders are actually leaning bullish. Why? Because options-based indicators (notably the ISE Sentiment Index) have become fairly detached from equity markets. Using sentiment as a signal for buys/sells is often a bad idea. And in the case of these options indicators, they seem to be losing value as times go on.
Continue Reading -->Not Even Trump Can Help Twitter!
Yesterday after the close, Twitter (TWTR) announced yet another disappointing quarterly earnings report. On the surface, Twitter has the wind at its back. We just had the craziest Presidential election in history, and the most active global news flow I’ve ever seen. Black Lives Matter. Migrant crisis. Syria. The Brexit. Italy’s No Vote. Right wing nationalist movements rising worldwide. There’s never been more stuff to talk about! Heck, President Trump Tweets so often that you’d think he owns the stock. Plus, Twitter gets a staggering amount of exposure from the media. Athletes and celebrities’ feeds are constantly promoted on the mainstream media. Yet Twitter’s ad revenues DECLINED year-over-year in Q4. Facebook (FB) grew ad revenues by 53%! And Facebook has a revenue base that’s 10 times as big! So what’s the deal here? Aside from the fact that Twitter is not user-friendly and offers little in the way of instant gratification — Facebook has the greatest advertising platform the world’s ever seen. It has in-depth personal information on almost 2 billion people. Think about it. Odds are, Facebook knows: 1) Your full name, age, location, marital/family status, and employment history 2) All of your hobbies and personal interests 3) Your political affiliation 4) What websites you visit 5) What companies you buy from 6) Who you talk to 7) Where you go Twitter surely has some of this data, but it also has some major disadvantages: 1) A smaller user base, and smaller data set 2) More anonymity Speak to anyone in the Internet marketing world, and you’ll know that businesses are tossing huge sums of money at Facebook and Instagram ads. Twitter? Not many folks seem to care.
Continue Reading -->Post-Earnings Analysis: Tech in Focus
FN — Reported very strongly on Monday and continues to signal strength for my fiber thesis. The most curious thing is how little pin action is occurring off of these strong reports. More on this below. This stock would probably be up more if not for the CEO announcing he is leaving. Selling into the mid/high $30’s here probably makes sense. I still favor other names in the space. OCLR — Case in point, they have sold off since they reported a whopper and again, has shown no real upside pin action, though it’s showing a touch of a bounce today. A possible explanation here is that there have been continuing rumors on OCLR as a target for a FNSR takeout. One would think this could/should have the stock higher, but maybe some think that OCLR has risen a lot and won’t garner a big premium. My view is that the forward PSR is still just barely above 2. This is very cheap on any LT or M&A valuation perspective given the consolidation that’s occurred in the space over the last few years. I was buying some OCLR again recently into the selling. I’ll look to add more in the mid $8’s or lower should it go there. AKAM — Strong report but this stock had already soared and a guide which was largely inline just isn’t enough to keep this stock going. In the mid/high $50’s, I’ll take a gander at this one. This is also somewhat indicative of some rotation action that’s starting to emanate further in the market. Strong reports on hot stocks are seeing more flat to selling action than buying action. This is something I was harping on all the way back in Nov/Dec of last year. NEWR — Another very good report and the stock is down moderately. Again, it was close to yearky highs. I prefer SPLK and VRNS and HDP in this space. LITE — Back to the Fibers… LITE reported a good but not a great QTR at all. However, they talked about a strong forward outlook out past just one QTR and the shares are ripping. LITE has also been seeing product shortages and that’s usually well received in Tech land. Again, I would think this would engender a lot more pin action than we are seeing but that pin action might come in delayed reaction fashion as is popular with Algo trading the last couple years. TWLO — The best report of last night, hands down, was TWLO’s very big beat on the current quarter with a notably raised Rev. guide for both the QTR and FY outlooks. I’m a buyer on any notable weakness here. If one looks at how something like an ANET or several other IPO’s traded in recent years, the first year of trading is fraught with lots of raids and rumors. I suppose the machines can mess with TWLO for another QTR or two but if they keep delivering these sorts of results this could have a very substantial move higher. In the meantime, I think a range trade of 4-6pts will occur a good number of times. And guess what, we just saw a 6pt move off the recent early year lows. A break above $32.50 will break that range and setup the next higher leg. Disclosure: Position in OCLR, SPLK, VMS, HDP, TWLO
Continue Reading -->There Are More Bears Than Bulls Out in the Wild
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side provides evidence for their views. So let’s see how traders are feeling into today’s inauguration: 1) VIX Spread – Bullish The 3-month VIX spread is at +4.51, which indicates traders are pricing in very low near-term volatility. This means traders are bullish. 2) CNN Fear & Greed Index – Neutral The Fear & Greed Index is at 49. F&G operates on a 1-100 scale, and 50 is neutral. So we’re right in the middle. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 32.8% of individual investors are bullish, which is below the long-term average of 38.5%. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio is at 0.71 with a 3-day moving average of 0.74. This indicates higher-than-average bearishness. 5) ISE Sentiment – Bearish The ISE Sentiment Index is at just 79 (79 calls for every 100 puts) this morning – which is a bearish reading. And the 10-day moving average is 81.3. This also indicates bearish sentiment. Conclusion Out of 5 sentiment indicators, we have 1 bullish, 1 neutral, and 3 bearish. I’ve been hearing a lot of chatter about how bullish the crowd is. But if anything, traders are leaning against the market, hoping for a fall.
Continue Reading -->Trump Pumps Up Pipeline Stocks, and I’m Holding On
Way back on December 11, 2015, I tossed the Kayne Anderson MLP Closed-End Fund (KYN) into my retirement account, back when it was around $14. President Trump signed orders to expedite the goverment’s review of the Keystone XL and Dakota Access pipelines, which is driving up shares of MLP’s, with KYN breaking through $20. KYN’s second biggest holding is Energy Transfer Partners (ETP) (19% of the fund), which is building the Dakota Access pipeline. This is a nice gain, but I’m not selling any. Why? Because KYN’s 4 most recent quarterly dividends have been returns of capital, not actual income. That means KYN has been distributing fund assets back to fund owners. So there are no actual income gains — they’ve all been from price appreciation. Assuming these pipelines go through, and assuming we see more domestic oil production under Trump, KYN could actually start distributing real income back to shareholders. That would be a huge catalyst, possibly breaking KYN out of its 8-month channel. Also, KYN is trading at a mere +0.2% premium to NAV vs. a 3-year average of +3.8%. That premium has actually gone as high as 16.4% over the past 5 years. So I’m going to let it ride. It’s come a long way but I don’t think froth has set in.
Continue Reading -->T3’s Take 3: Yellen Goes Hawk, Spikes the Dollar
1) Yellen Goes Full Hawk Today, Federal Reserve Chair Janet Yellen gave a speech at the Commonwealth Club in San Franscisco, and she swung her hawk hammer. Yellen said the Fed is close to meeting its dual mandate of full employment and price stability, and that Fed officials expect a few rate hikes this year. The US dollar immediately ripped on the news, gaining 1.7% against the yen and 0.7% against the euro. The dollar in strength put a hurting on gold, which fell -0.7%. The ever-volatile gold miners ETF(GDX) dropped -1.5%. 2) Stocks Bounce Yellen’s hawkiskhness drove a rebound in stocks, and the S&P 500 managed to squeeze up 0.2% to 2271.89. That’s not exactly exciting, but there were some signs of strength under the hood. The Russell 2000 rose 0.5%, and the Nasdaq Biotech ETF (IBB) rose 0.8%. Yellen’s hawk talk drove the S&P Financials ETF (XLF) up 0.8%, with Regional Banks (KRE) up 1.1%. Retail, energy, and US Treasuries led the decliners’ column today. After the close today, Netflix (NFLX) reported better-than-expected Q4 earnings and surged over $10. 3) Jeff Cooper on Gold This afternoon, T3 Live’s Jeff Cooper issued the following analysis of gold: Yesterday, GLD gapped up into a shelf of resistance from the spring of 2016 around 115. Today, after treading water in the early going, the bears came out to play. GLD is pulling back into the gap window from yesterday. GLD and the miners have done a lot of work and are entitled to inhale. However, GLD is doing something it hasn’t done for many moon: GLD has delivered a Golden Cross with the 50 week crossing above the 200. Click here to learn more about Jeff Cooper’s Daily Market Report.
Continue Reading -->Jeff Cooper’s Morning Call Express: Respect Your Stops
In today’s Morning Call Express, T3 Live’s Jeff Cooper breaks down the action in SPX and talks about the important of stops. Click here to learn more about Jeff Cooper’s Daily Market Report.
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