Catch Scott Redler’s Interview With Futures Radio!
T3 Live Chief Strategic Officer Scott Redler was recently interviewed by Futures Radio, and we encourage you to click over to listen! In this in-depth interview, Scott discusses: How he got started in trading in the 1990’s Technical analysis techniques he uses every day Current market issues like Deutsche Bank, the US Presidential election, and more! Click here to listen to the interview!
Continue Reading -->Weekly Sentiment Update: Traders Are Surprisingly Bearish
Want to Earn Serious Income With Options? Then click here to check out Doug Robertson’s special live trading event! Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side provides evidence for their views. So I like regularly run through a wide variety of sentiment measures to get an accurate reflection of the market’s mood. According to 7 sentiment measures I track, traders appear to be modestly bearish, even though the S&P 500 is still within a stone’s throw of the 2193 all-time high. 1) SPX Options Prices – Bearish SPX options prices show a high put skew. I looked at 10% out of the money 6 month SPX options. There is currently a 9.8 point skew in implied volatilities on the options. That’s the 94th percentile. So relative to calls, traders are paying more for 10% OTM 6 month puts than they have 94% of the time over the past 5 years. 2) ISE Sentiment – Bearish The ISE Sentiment Index closed at 81 yesterday (81 puts for every 100 calls). And its 10 day moving average is just 78 — a level that indicates bearishness. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 24.0% of individual investors are bullish, well below the long-term average of 38.4%, and below the 2016 YTD average of 28.1%. Bearish sentiment is at 37.1%, down a bit from last week, but well above the 30.3% long-term average. 4) Wall Street Strategists – Neutral The average year-end target price for the S&P 500 is 2169, according to Bloomberg. That implies the market does nothing into year-end. 5) CBOE Equity Put-Call – Neutral The CBOE Equity-Put Call ratio was 0.66 yesterday, which is just below the YTD average of 0.69. This points to neutral sentiment. 6) CNN Fear & Greed Index – Neutral The Fear & Greed Index is at 50. F&G operates on a 1-100 scale, and 50 is neutral perfectly neutral. 7) Investors Intelligence – Bullish Yesterday, the Investors Intelligence Survey of newsletter writers showed a slightly increase in bullishness to 45.2%, snapping a 4-week losing streak.Those calling for correction are at 31.7%, the highest since June 29. ********* So we have 3 bearish indicators, 3 neutral indicators, and 1 bullish indicator. Blend them together and you have a moderately bearish crowd. I’m hearing a lot of bears say that everyone’s complacent… but who are they talking about? P.S. Don’t forget to sign up for Doug Robertson’s FREE options event!
Continue Reading -->Scott Redler’s Morning Call Express: Oily Dressing
In today’s Morning Call Express video, T3 Live Chief Strategic Officer Scott Redler breaks down the action in the aftermath of yesterday’s oil-driven rally. Want to Earn Serious Income With Options? Then click here to check out Doug Robertson’s special live trading event!
Continue Reading -->The Morning Hammer: Thank You OPEC!
Want to Earn Serious Income With Options? Then click here to check out Doug Robertson’s special live trading event! ******** Yesterday afternoon, OPEC announced an output cut, ending months of speculation and confusing headlines. That sent oil and energy stocks skyrocketing, and pushed the S&P 500 to flip from a decline to a 0.5% gain. Now if you are bullish on oil and willing to take serious risk, I would look at Diamond Offshore Drilling (DO), which will be removed from the S&P at tomorrow’s close. This is a truly hated stock (just 3 buy ratings out of 35 covering analysts) and it’s still near generational lows. The index removal is definitely the type of news you see near cyclical lows. I’m already pretty heavy in energy with my KYN and BGR positions, but I’m still taking a look. Overseas markets followed through on the oil-driven US strength, with the Euro Stoxx 50 up 0.8% and the Nikkei up 1.4%. Commerzbank announced a major workforce reduction and dividend suspension, and is shrinking its securities business. Pepsi (PEP) beat on earnings and raised guidance on strong results in North America. Barclays cut its target on Apple (AAPL) and removed its “Top Pick” status, sending the stock a little lower pre-market. Pacific Crest downgraded FitBit (FIT) to underweight on weak channel checks. Despite the mostly good news flow, SPX futures are back to flat, which I guess makes sense ahead of 2 days of important economic data. Today, we have GDP with the all-important PCE Deflator (the Fed’s preferred inflation indicator) following tomorrow. Trader are split roughly 50-50 on whether the Fed will hike rates in December, and these numbers could very well shift based on these reports. US economic data has been generally stinky since late July, though we’ve had a few bright spots like the recent Durable Goods, Consumer Confidence, and Jobless Claims numbers. This morning, the Fed’s Harker said he wants to raise rates sooner rather than later. So let’s see if the numbers support him.
Continue Reading -->The Morning Hammer: The Deutsche Bounce
Deutsche Bank (DB) is bouncing this morning after agreeing to sell its UK insurance unit. But more importantly, CEO John Cryan said the bank will not require a capital raise. DB is facing a $14 billion bill from the US Department of Justice, which has raised fears about liquidity problems. But for now, traders are taking the worst-case scenario off the table, which is helping European stocks. The DAX is up 1.0% with German banks up 1.4%. ECB President Mario Draghi is expected to speak to reporters around 4:00 p.m., and he’s likely to comment on monetary policy and the European economy. Crude oil is turning higher today after Saudi Arabia may compromise with Iran on a future supply agreement. OPEC is meeting in Algiers so odds are we’ll see fresh oil headlines in the near future. Nike (NKE) beat on earnings but reported weak future orders and missed on gross margins. Odds are this is a competitive issue rather than an economic one, since Adidas beat and UnderArmour (UA) is also coming on strong. We could be in for a big 3 days. Traders are split 50-50 as to whether the Fed moves in December. We’ve seen a big slide down in US economic data strength since late June, and we’ve got some big numbers coming out through the end of the week: Today: Durable Goods, plus Fed Chair Yellen testifies before a House Panel Thursday: GDP, Pending Home Sales Friday: Personal Income/Spending, PCE Deflator, Chicago PMI Now if we see a string of misses, we could see big rips in gold and US Treasuries, because traders may assume the Fed will have to continue to back off. But keep in mind that the converse is true: if we see some big beats, maybe traders will seriously buy into rate hikes. Again, the market is split 50-50 on December. So while the talking heads insist the Fed is hawkish, the market is not exactly full of true believers. SPX futures are basically flat… hopefully not for long.
Continue Reading -->Scott Redler’s Morning Call Express: Not Much Continuity
In today’s Morning Call Express, T3 Live Chief Strategic Officer Scott Redler breaks down the action in SPX, as well as individual names like GOOGL, AAPL, and LN.
Continue Reading -->Clinton Victory Means a Peso Victory
1) Mexican Peso Jumps The big post-election meme on Wall Street today is the jump in the Mexican peso. It’s up 1.2% against the US dollar today on Hillary Clinton’s strong showing in last night’s debate. Donald Trump is not viewed as peso-friendly, to say the least. But keep in mind that over the past few months, broader equity markets haven’t shown a tendency to favor one candidate over the other. That may change as we get closer to the finish line, especially around the second debate on Sunday, October 9. 2) Biotech Is Fine Biotech (IBB) is doing well this morning. In recent history, biotech has done better when Trump was favored, so this is an interesting development — especially since Gilead (GILD) was downgraded. 3) Gold Sinks Gold is taking a big hit this morning, and some of that is attributed to Clinton’s win. Trump’s wild-card nature is seen as more favorable for gold, even though gold’s status as a safety asset is in question. Chinese gold imports from Hong Kong also hit a 7-month low. However, keep in mind that the junior miners (GDXJ) are actually slightly outperforming the metal. GDXJ is essentially a high-octane way to play the metal, so I’m surprised it’s not doing worse. Stay on the lookout for a possible bounce higher in gold. 4) Crude Games It seems like oil bulls keep getting carried away on chatter about production freezes/cuts, and they always end up getting burned. I’m starting to think we should ignore all oil headlines until we get official word on the outcome of the meeting in Algiers. For now, the chances of a production freeze or cut look pretty slim. 5) Economic Data Today, we saw in-line S&P home data, a Markit Services PMI beat, a consumer confidence beat, and a miss on the Richond Fed. Overall, the economic data trend is still down. As you can see in this chart of the Citi US Economic Surprise Index, economic data strength relative to expectations is right around Brexit levels. The difference between now and then is that the market had more or less price rate hikes out. Now it’s pretty much 50-50 as to whether the Fed will move in Deceember. If the data trend continues to weaken, we could very well see the dollar dip and gold rip. We have Durable Goods on Wednesday, GDP on Thursday, and Personal Income/Spending plus the PCE Deflator Friday. So we could see some real fireworks!
Continue Reading -->Morning Call Express: Debating Times
In today’s Morning Call Express, T3 Live Chief Strategic Scott Redler breaks down the market action following the first US Presidential debate between Donald Trump and Hillary Clinton.
Continue Reading -->T3’s Take 3: Stocks Drop Ahead of Epic Trump vs. Clinton Showdown
A Unique Way to Trade Options… My buddy Doug Robertson is hosting a FREE options trading webinar this Thursday. Doug’s going to be teaching his unique method for creating income with options, so I suggest you check it out. ********* 1) Disney for Twitter? Seriously? Twitter (TWTR) shares got a huge lift on record options volume Friday on rumors that the company could be acquired by Google (GOOGL) or Salesforce.com (CRM). Today, a host of analysts and commentators threw water on the rumors, and the stock was even downgraded by Oppenheimer, driving some profit-taking. But this afternoon, Bloomberg reported that Disney (DIS) is working with an adviser on a potential Twitter bid, sending the stock up all over again. Presumably, Twitter’s real-time news and data feeds could be integrated into Disney media properties like ABC and ESPN. However, a T3 Twitter poll indicates that trader still think Google (GOOGL) is the most likely buyer, assuming it happens at all: 2) Bank Scare Drives Downside German Chancellor Angela Merkel ruled out state assistance for Deutsche Bank (DB) before next year’s national election, which hit the stock hard. Deutsche has been fined $14 billion by the US Department of Justice for its mortgage-backed securities practices, which could cause liquidity problems for the bank. That sent European equities down this morning, setting the tone for the US. The S&P 500 fell -0.9% to 2146.10, with the Nasdaq Composite and Russell 2000 making similar moves. US bank stocks led the decliners’ column, following their European counterparts. Gold mining stocks fell after precious metals slipped in the afternoon. On the plus side, crude oil and energy stocks pushed higher on continued chatter about a possible OPEC output freeze. 3) Trump vs. Clinton The first Presidential debate between Donald Trump and Hillary Clinton will be held tonight. Aside from the general market fallout, traders will especially be interested in how health care and drug stocks perform tomorrow. One major reason biotech (IBB) has rallied in recent weeks was Hillary Clinton’s pneumonia diagnosis. Since she has been an outspoken critic of rising drug prices — specifically targeting Mylan’s (MYL) Epipen — she is seen as an enemy of biotech and big pharma. Her illness boosted Trump in the polls, which in turn gave biotech a reprieve. So if Clinton scores a clear victory, drug and biotech stocks are likely to fall. And obviously, the reverse is likely to be true if Trump wins. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 09:00 S&P CoreLogic CS US HPI MoM SA (Jul): prior 0.21% 09:00 S&P CoreLogic CS 20-City NSA Index (Jul): prior 189.87 09:00 S&P CoreLogic CS 20-City MoM SA (Jul): exp. 0.00%, prior -0.07% 09:00 S&P CoreLogic CS 20-City YoY NSA (Jul): exp. 5.10%, prior 5.13% 09:00 S&P CoreLogic CS US HPI NSA Index (Jul): prior 182.42 09:00 S&P CoreLogic CS US HPI YoY NSA (Jul): prior 5.07% 09:45 Markit US Services PMI (Sep P): exp. 51.2, prior 51 09:45 Markit US Composite PMI (Sep P): prior 51.5 10:00 Consumer Confidence Index (Sep): exp. 99, prior 101.1 10:00 Richmond Fed Manufact. Index (Sep): exp. -2, prior -11 11:15 Fed Vice Chair Fischer Discusses Why Study Economics? Global Economics 04:00 EUR M3 Money Supply 20:20 AUD RBA Assist Gov Edey Speaks Earnings Before Open: None of significance After Close: Cintas (CTAS) Nike (NKE)
Continue Reading -->A Trump vs. Clinton Options Strategy
Tonight we’ll see the first US Presidential debate debate between Donald Trump and Hillary Clinton. I’m going to leave my personal opinions about both candidates out of this, and keep it focused on the markets. A major reason biotech (IBB) has rallied in recent weeks was Hillary Clinton’s pneumonia diagnosis. Since she has been an outspoken critic of rising drug prices — specifically targeting Mylan’s (MYL) Epipen — she is seen as an enemy of biotech and big pharma. Her illness boosted Trump in the polls, which in turn gave biotech a reprieve. That’s perhaps a bit ironic, because Trump himself has been critical of drug company pricing practices. So heading into the debate, there appears to be a binary outcome — not between the candidates, but whether or now there is a decisive outcome. If it’s a close call, that will just add to the confusion and the impact on stocks is a wash. But if one side scores a big victory, odds are these stocks move, at least in the early going. So I’d look at the following trades depending upon one’s stance about the outcome: Benefits from a big Clinton or Trump victory: -Buy IBB $295 straddle expiring October 15 for $7 (give or take 10 cents) Benefits from a stalemate: -Sell IBB weekly $285/$290/$300/$305 iron condor expiring Friday for $1.88 (give or take 5 cents) I’d keep any positions small, and would look to close out either one tomorrow on the open.
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