Biotech powers up! And 4 other thoughts on today’s action…
1) BIo-Defense Biotech (IBB) put up a nice defense against that first little dip that started at 9:45 a.m. ET, and IBB is up 1.5% on the day — good stuff! The rest of the market was looking a little shaky, but traders tend to feel good when biotech is going strong. I’m positioned bearish near-term so I want biotech to get hit hard, but I’m not holding my breath just yet. 2) OPEC Reality? It seems like traders are finally remembering the disappointment at the June OPEC meeting meeting, when many people were expecting a production freeze. Crude oil is down -2.8% and oil service names are feeling the ugly stick. Let’s see if the rest of the market starts to notice. 3) HYG HYG has been quite strong as of late courtesy of the oil rebound. (crude oil prices and high-yield energy bond prices are closely tied for obvious reason). I’d closely track it, particularly its relative performance against Treasury ETFs like IEF. Bad high-yield makes equity markets nervous. 4) Declining Earnings — Who Cares? The permabears are out chattering about the fact that we’re on a 5-quarter streak for negative earnings — something we haven’t seen since the 2008-2009 crisis. Does it matter? Sure! But you know what matters even more? The fact that while bad, earnings are not quite as awful as expected. I’m choosing not to care about this until Mr. Market tells me it’s important via price action. 5) And the Swoon…. As I’m writing this, SPX has come off morning highs by a few points and approaching the morning low of 2175.96. It’s been a long, long time since we’ve seen a hard intraday reversal that turned into a meaningful down day. Will we get it today? Biotech and oil have the answer, so watch em!
Continue Reading -->The Morning Hammer: The Broken Record Market
Don’t Fear Forex… Attend my buddy Kurt Capra free webinar tomorrow and learn why so many stock and options traders are embracing the lucrative world of forex. Click here for more info. SPX futures are taking a small hit today as oil pulls back and the dollar keeps rising on Fed rate hike speculation. Morgan Stanley and Barclays both issues notes stating that crude prices would correct. There is also growing doubt that OPEC will institute a production freeze or cut at its September meeting. As I pointed out last week, oil ran up big into the June OPEC meeting on speculation of an output freeze. OPEC did nothing, and oil topped out shortly thereafter. It seems like folks are finally starting to remember that. On Sunday, Fed vice-chairman Stanley Fischer said the US economy was closing to hitting full employment and the Fed’s 2% inflation goal. Right now, traders are pricing in a 51% chance of a December rate hike, so markets are split right down the middle. We may get some clarity with FOMC Chair Janet Yellen’s speech at Jackson Hole on Friday. But I’d like to put an emphasis on the word MAY. Don’t forget that many Fed Heads came out hawkish ahead of the June meeting, only to be surprised by a dovish statement. The US economic calendar is pretty light — we just have the Chicago Fed National Activity Index hitting at 8:30 a.m. ET. At 12:00 p.m., German Chancellor Angela Merkel, French President Francois Hollande, and Italian Prime Minister Matteo Renzi will hold a press conference on the state of the European Union. On the deal front, Pfizer (PFE) is buying cancer drug maker Medivation (MDVN) for $14 billion. Reuters reported that several other players including Gilead (GILD) and Merck (MRK) were interested in Medivation. And a US security panel approved ChemChina’s $43 billion takeover of pesticide/seed giant Syngenta (SYT). The VIX is up 13%, which implies some more tension on the tape, but the bears still need to deliver some real downside follow-through to provide a real scare. We’ve gone 30 trading days without a 1% move in the SPX. I’ve got my fingers crossed that we’re finally passing this stretch of boredom, but I’m not holding my breath. P.S. Don’t forget to sign up for Kurt Capra’s free forex trading event!
Continue Reading -->Morning Call Express: Don’t Fall Asleep At The Wheel
Don’t Fear Forex… Attend my buddy Kurt Capra free webinar tomorrow and learn why so many stock and options traders are embracing the lucrative world of forex. In today’s Morning Call Express, Soctt Redler talks about the current trend of the SPX and the key levels to be watching for technical support. He also looks at various sectors like the Nasdaq Biotech. (IBB) as well as key, high beta tech names like AMZN, FB, and others. Scott also notes that banks and gold could be key sectors to watch going into this week.
Continue Reading -->T3’s Take 3: 30 Days of Nothing…
Don’t Fear Forex… Are you a stock or options trader in search of new profit opportunities? Click here to attend a FREE forex trading webinar 1) 30-Day Grind Today was the 30th straight day that the S&P 500 index failed to make a 1% move. Year-to-date ahead of this stretch the S&P moved 1% about once every 3 days, so I’m not exaggerating when I say this is the most boring market I’ve ever seen. The index finished down -0.2% at 2184, while the Russell 2000 and Nasdaq Composite did slightly better. Deere (DE) and Foot Locker (FL) both rose sharply on their strong earnings reports, while biotech and oil service names fell. 2) Fed Follies! On Wednesday, the Fed released the dovish-leaning Minutes from its July meeting. But on Thursday, Fed officials Williams and Dudley both said rate hikes are on the table in the near-term, which has traders ratcheting up their rate hike expectations once again. That sent bond and gold lower today, while regional banks (which benefit from higher rates) caught a small bid. Next week, Fed Chair Janet Yellen will speak at an annual meeting of central bankers in Jackson Hole, Wyoming, and will likely give some more clues on the Fed’s near-term trajectory. Given the Fed’s erratic nature this year, there is no telling what she’ll say, so be very careful if you’re placing bets! 3) Kurt Capra on SCTY Today on T3 Live’s Virtual Trading Floor, my colleague Kurt Capra provided the following analysis on controversial solar stock Solar City (SCTY): SolarCity (SCTY) has been showing weakness and an inability to bounce. The daily chart is set up to break down: Look for a move under the bottom of the range sometime next week. P.S. Don’t forget to sign up for our FREE forex trading webinar. Monday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Chicago Fed Nat Activity Index (Jul): prior 0.16 Global Economics 08:30 CAD Wholesale Sales m/m Earnings Before Open: None of significance After Close: NQ Mobile Inc (NQ)
Continue Reading -->Webinar Replay: The Future of Trading with Rob Smith
In this special webinar, Rob Smith walks through his unique Quant Edge Trading System, including: The Time Frame Continuity Principle Actionable Signals Broadening Formations Want to catch Rob’s next LIVE webinar? Click here.
Continue Reading -->Scott Redler’s Chart Attack: AAPL, FB
Yesterday’s tactical plan for Apple (AAPL) to buy/test near the 8day was a good road map. Now we’ll see if $108.30ish holds and builds an upper floor to digest a nice post earnings move from $102.75 to $110.23. Some of my spreads expire this Friday. September will sit. Facebook (FB) has been digesting/lethargic since they sold the earnings report at highs. Yesterday could be a start as I nibbled at the 21 day which has been support. In order for it to get better, it needs to take out and close above $124.40 but the real area is $126. Positions Disclosure: Scott J. Redler is long AAPL call spreads, FB P.S. Want to get an edge in today’s algo/HFT-driven markets? Click here to learn about Rob Smith’s FREE Quant Edge Webinar
Continue Reading -->Crude Oil Rocks… and 4 Other Thoughts on Today’s Market
Want to get an edge in today’s algo/HFT-driven markets? Click here to learn about Rob Smith’s FREE Quant Edge Webinar 1) The Beast! Crude oil is an absolute beast with 2 key catalysts pushing it: 1) Fed dovishness, which is pushing down the dollar and 2) hopes for an output freeze or cut at the September OPEC meeting. It seems like everyone forgot that OPEC disappointed at the June meeting after a ton of anticipation that a policy change was in the wings. But that’s the nature of momentum. And oh yeah — check out the nice, slow grind up in HYG. That is a good sign for the bulls. 2) Buh-Buh-Buh-Biotech Biotech (IBB) is putting in a nice bounce off the lows this morning and outperforming by a solid margin. As with HYG, this is a good sign for the bulls And it’s an area the bears need to break to get a real downside move. 3) Russell 2000 Same story as HYG/IBB. 4) Zee VIX! Yesterday’s intraday rally in SPX and today’s rally up to break-even is sending the VIX down below 12 again. This is bad news for me since I’m very much long volatility through VIX calls. I admit I’m growing restless. We haven’t had a 1% down day since June 27, which seems crazy. This stretch is even more boring than the April-May snoozefest. 5) Twilio (TWLO) The other day, I listed 3 reasons I would not short Twilio. That post received a lot of attention. The stock has pulled back a bit, but it still looks like a pretty dangerous short. Put option open interest has gone from 9,710 on Friday, August 5 to 34,394 yesterday. Plus, on August, 5, call open interest was almost double the put open interest. And as of yesterday, the put open interest exceeds the call side. The stock is also Hard Borrow, has big short interest, and there is still a massive put skew. Unless the broader markets really break down, I suspect Twilio shorts will get steamrolled.
Continue Reading -->Morning Call Express: Scattered Opportunities
In today’s Morning Call Express, Scott Redler talks about the SPX and how it has held the 21day. He also looks at various sectors like the IBB and XLE. He also looks at a couple individual names.
Continue Reading -->T3’s Take 3: The Fed Hits and Nothing Changes
1) Fed Schmed… Today, the Fed released the Minutes from its July meeting. Traders were pricing in a 51% chance of a December rate hike, which meant expectations were split right down the middle. Unfortunately, we did not get much on the Fed’s near-term trajectory. Some FOMC officials are waiting for signs of improved inflation trends. Others were more optimistic, saying that the labor market is approaching maximum employment, and that progress in reaching the Fed’s inflation goals is expected continue. But overall, the Fed leaned dovish, which sent the dollar lower, and commodities higher. 2) The Grind Continues Following lackluster action overseas, US markets were weak in early trading, and the S&P 500 looked like it may even put in its first down day since July 27. But after dipping to 2168.50, the index ran up in a straight line, aside from a tiny dip following the release of the FOMC Minutes. By day’s end, the S&P managed to squeeze into the green with a 0.2% gain. Utilities led the winners’ column on the Fed’s dovishness, while small caps showed relative weakness. And much to my chagrin, the VIX hit an early high at 13.71, but collapsed to 12.17 as stocks climbed off the lows. 3) Crude Oil Keeps on Chugging Oil prices rallied again today after a bullish inventory report from the Energy Information Administration. Economists expected a 950,000 increase in inventories, but they fell a whopping -2.5 million. Gasoline inventories also fell significantly. Oil was also boosted by the weak dollar, and ongoing hopes an OPEC production freeze or cut. As a result, energy stocks outperformed today. Thursday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Initial Jobless Claims (8/13): exp. 265k, prior 266k 08:30 Continuing Claims (8/6): exp. 2141k, prior 2155k 08:30 Philadelphia Fed Business Outlook (Aug): exp. 2, prior -2.9 09:45 Bloomberg Economic Expectations (Aug): prior 44.5 09:45 Bloomberg Consumer Comfort (8/14): prior 41.8 10:00 Fed’s Dudley Answers Questions at Press Briefing in New York 10:00 Leading Index (Jul): exp. 0.30%, prior 0.30% 10:30 EIA Natural Gas Storage Change (8/12): exp. 26, prior 29 10:30 EIA Working Natural Gas Implied Flow (8/12): exp. 26, prior 29 16:00 Federal Reserve President John Williams Speaks in Anchorage 20:00 Fed’s Kaplan to Speak in Dallas Global Economics 04:30 GBP Retail Sales m/m 08:30 CAD Foreign Securities Purchases Earnings Before Open: Canadian Solar Inc (CSIQ) Wal Mart Stores (WMT) After Close: Gap Inc (GPS) Ross Stores (ROSS)
Continue Reading -->The Market Is Setting Up a Different Move
Quantitative Analysis is the future of trading. Rob Smith will show you why. Click here for more info. This is the first time we have seen follow-through in the markets in a while. That should be telling and it looks as though we are finally setting up for a pullback. We have entered the August 5 gap and now look set to fill it and some more. A good check back in a healthy market would be to pull back to around the 50 day moving average or around 213 in SPY. Its only a couple of percentage points below here, but picking up that kind of alpha is what I like to do. I am selling down my longs here and looking to buy back lower.
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