Is Gold About to Get Cracked?
1) US Economic Data Comeback US economic data continues to firm up following a major drop in momentum since July. In the past week, we’ve seen decent new home sales, Markit Services PMI, durable goods, Chicago PMI, GDP, jobless claims, and ISM Manufacturing numbers. Check out this chart of the Citi US Economic Surprise Index — this could be the start of a new trend following a collapse in expectations: Some reports have been some clunkers, but overall, the strength of data relative to expectations is improving into Friday’s big NFP report. However… 2) Traders Aren’t Sold on the Fed Just Yet A lot of traders believe a December rate hike is a foregone conclusion. The numbers say otherwise. Fed funds futures imply a 61% probability of a December rate increase, so the market’s not buying in whole-hog. This brings us back to this week’s NFP report, which could move the numbers one way or the other. I’d especially be watching… 3) Gold! Call me crazy, but doesn’t this Gold (GLD) $125ish level look pivotal? Gold has been making lower highs, and I’d assume that a big NFP report on Friday could mean a very ugly break of this $125ish support level. There’s been a lot of talk about a possible head & shoulders forming over the past few weeks, but this bigger-picture pattern looks more important. 4) Is Twitter Still in Play? Today, Bloomberg reported that Google (GOOGL) is considering a bid for Twitter (TWTR). Google has perennially been seen as a logical buyer for Twitter because of the latter’s strength in real-time search. But the real good news for Twitter longs is the sheer number of rumored suitors floating around — Salesforce.com (CRM), Disney (DIS), and Microsoft (MSFT) have also been mentioned. This way, if one alleged suitor leaves the picture, we’ve still got others to prevent an all-out collapse. But I’ll still only believe this deal when I see it. Mark your calendars for Twitter’s Q3 earnings report on October 25 — it’s gonna be a big one! 5) A Boom in Call Options? The ISE Sentiment Index, which is my favorite short-term sentiment indicator, is reading 189 this morning as of 10:50 a.m. ET. That’s 189 calls for every 100 puts, which means rampant bullishness, at least on an intra-day basis. Perhaps ironically, we are seeing lots of activity in GLD. NFLX, TSLA, BMY, and CAB are also active. (TSLA announced strong sales, CAB is being taken over)
Continue Reading -->Scott Redler’s Morning Call Express: Fourth Quarter, Fresh Start
In today’s Morning Call Express, Scott Redler talks about the tightening range in the SPX and what levels to be watching as we head into a new month and fourth quarter. He also looks at the XLE in light of OPEC as well as individual names like AMZN, FB and some new issues.
Continue Reading -->Morning Call Express: A Closer Look, Dow Jones Industrial
In today’s Morning Call Express, Jeff Cooper talks about the potential head and shoulders top on the Dow Jones Industrial and the action seen yesterday. If support is broken, a test of the 200 day moving average is on the table. He also talks about the Gann connects which are in play.
Continue Reading -->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!
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