Tag Archives for " crude oil "
The Trouble With Crude Oil
The action in crude oil has been hideous as of late, as you can see in this weekly chart: To be fair, it doubled in a year, so some profit-taking may be in order. However, let’s hope it can resume the uptrend, or at least hold the uptrend in the $46-$47 area. The oil rebound off the $26.05 February 2016 low played a huge role in last year’s rebound. There’s been no volatility in 2017 but oil is certainly a candidate for messing up the party. Remember, oil affects a lot more than energy stocks. Many regional banks have large energy loan books, and weak oil means more defaults. There are also an awful lot of high-yield energy bonds that would suffer. And historically, weak high-yield markets means trouble for the broader equities market. For now, the bulls remain in firm control, but oil could inspire the bears to finally step up after getting destroyed in the post-election rally.
Continue Reading -->T3’s Take 3: Do You Feel the Heat Around the Corner?
“Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner.” -Neil McCauley, as portrayed by Robert DeNiro in Heat Before I get started, I’d like to invite you to check out the replay of our latest webinar Why You Shouldn’t Fear Forex. 1) Is that the Heat Around the Corner? For what seems like the 900th day in a row, the S&P 500 failed to make a substantial move. The index fell -0.2% to 2170.95 — far from a disaster — but tension is starting to appear on the tape. The index is now trading below its lost its 8 and 21 day exponential moving averages, indicating a loss of short-term momentum. Crude oil is almost 10% off its highs. (more on this below) Biotechnology, which has been slumping since Presidential candidate Hillary Clinton’s attack on Mylan (MYL) last week, continued its losing streak. The Nasdaq Biotech ETF (IBB) recently lost its 20 day moving average, and it is sitting right on top of its 50 day moving average — a break of which could spook traders. However, keep in mind that the bears have not been able to score a real victory since June 27, when the S&P fell -1.8% post-Brexit. Since then, we have not had a single 1% down day. 2) Crude Oil Takes a Big Hit WTI crude oil dropped over 3% below $45 today on another bearish inventory report. The E.I.A. said US crude stocks rose 2.3 million barrels last week, which was well above the 1.3 million consensus. This was the second large surprise build in a row, giving traders another reason to take profits ahead of the September OPEC meeting in Algeria. There has been assorted chatter that OPEC will announce a production freeze at meeting, but that’s clearly up in the air. 3) The Hawk Trade Rages On The big hawk trade — long US dollar, long banks, and short gold — is still going strong on hopes of more Fed rate hikes. In the equity markets, the gold miners (GDX) continue to take the brunt of the damage, with GDX falling -1.6% after yesterday’s -4.9% decline. And on the flip side, regional banks (KRE) continue to be a source of leadership. KRE is a good ETF for active traders to follow since it makes bigger moves than the better-known S&P Financials ETF (XLF). Thursday’s Trading Calendar US Economics (Time Zone: EDT) 07:30 Challenger Job Cuts YoY (Aug): -57.10% 08:30 Nonfarm Productivity (2Q F): exp. -0.60%, prior -0.50% 08:30 Unit Labor Costs (2Q F): exp. 2.10%, prior 2.00% 08:30 Initial Jobless Claims (8/27): exp. 265k, prior 261k 08:30 Continuing Claims (8/20): exp. 2145k, prior 2145k 09:45 Bloomberg Consumer Comfort (8/28): prior 45.3 09:45 Markit US Manufacturing PMI (Aug F): exp. 52.1, prior 52.1 10:00 Construction Spending MoM (Jul): exp. 0.50%, prior -0.60% 10:00 ISM Manufacturing (Aug): exp. 52, prior 52.6 10:00 ISM Prices Paid (Aug): exp. 54.8, prior 55 10:00 ISM New Orders (Aug): prior 56.9 10:30 EIA Natural Gas Storage Change (8/26): exp. 42, prior 11 10:30 EIA Working Natural Gas Implied Flow (8/26): exp. 42, prior 11 12:25 Fed’s Mester Speaks to Kentucky Philanthropy Initiative Wards Domestic Vehicle Sales (Aug): exp. 13.50m, prior 13.77m Wards Total Vehicle Sales (Aug): exp. 17.20m, prior 17.77m Global Economics 03:15 EUR Spanish Manufacturing PMI 04:30 GBP Manufacturing PMI Earnings Before Open: Campbell Soup (CPB) Ciena Corp (CIEN) Joy Global (JOY) Lululemon Athletica (LULU) After Close: Ambarella (AMBA) Broadcom (AVGO) Smith & Wesson Holding (SWHC)
Continue Reading -->Market Update: Crude Oil’s Freaky Mirror Image
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it The headline number on this morning’s crude oil inventory report was an almost perfect mirror image of last week’ The consensus was -850K. The actual number was +2501K. Last week, the consensus was +950K. And the actual number was -2508K. Weird, huh? Now let’s talk about the reaction. WTI crude is over $1 off morning highs, and the VIX has spiked to 13.20. The weak oil report is impacting sentiment already. The ISE Sentiment Index is at just 39 (39 call options bought for every 100 puts). However, as it stands now, we’re only seeing intermittent weakness in equities. The S&P 500 is down just -0.2, and I’m seeing one very important pocket of strength: the S&P Biotech ETF (XBI) is up 1.4%, and it is just plain hard to bet against this market when biotech is doing so well. We have not had a real down day since June 27. If today is to be the start of something real for the bears, they’ve got to attack biotech. They’ve already started beating on some of the hot new issues like Acacia (ACIA) and Line Corp. (LN), but biotech is key. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
Continue Reading -->T3’s Take 3: A Record High in a Serious Snoozefest
What do you really know about prop trading? Join my friends Amber Capra and Sami Abusaad for a FREE live webinar on the exciting world of prop trading, including: The unique financial benefits of a prop trading account How to select a program that’s right for you Pitfalls you must avoid Click here for more information 1) New All-Time Highs… and Not Much Else The S&P 500 opened higher today and quickly made another record high at 2185.44. However, the index quickly settled into a tight trading range, extending the summer snoozefest. The S&P has not made a 1% move since July 8, a span of 21 trading days. This action is reminiscent of the exceedingly boring April-May stretch, which is odd considering that we’re in the middle of earnings season with plenty of central banks news and economic data surprises. Health care was weak today after drug giant Allergan (AGN) reported a revenue miss, though to be fair, the sector rose just rose 12% in a straight line off the post-Brexit lows. The S&P fell -0.1% to 2180.86 today, and the Nasdaq and Russell 2000 also posted small losses. 2) Crude Oil Bounces Back Oil’s revival off the August 3 low continued today on OPEC bullishness, with WTI crude hitting $43 for the first time since July 27. OPEC President Mohammad Al Sada said today that the current bear market in oil is “only temporary,” and that higher crude oil demand will push up prices later this year. OPEC will also meet in Algeria next month to continue discussions about a possible output ceiling, though it’s not clear that the meeting will result in any actual output changes. While the equity markets were lackluster overall, crude oil’s bounce drove solid gains in energy stocks, particularly oil service names. The Vaneck Vectors Oil Service ETF (OIH) rose 2.3% to $28.96 today. The strong oil action also boosted the high-yield bond market, which is sensitive to oil prices. 3) Not Completely Awful Is Good Enough FactSet just updated their second-quarter earnings season stats for S&P 500 companies so let’s take a look at just how awful things are: 69% of companies are beating earnings estimates (vs. 5-year average of 67%) 54% of companies are beating sales estimates (vs. 5-year average of 55%) Q2 earnings have declined -3.5%, which is less awful than the -5.5% estimated as of June 30. Health care and tech have had the highest percentage of companies reporting earnings beats This means that the same trend that’s persisted for several quarters is still in place — earnings are nothing to write home about, but they are just a little better than expected. And that’s enough to get investors to hold their noses and buy. Or maybe they’re just fooled by central banks drenching the market in monetary perfume? Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 06:00 NFIB Small Business Optimism (Jul): exp. 94.5, prior 94.5 08:30 Nonfarm Productivity (2Q P): exp. 0.40%, prior -0.60% 08:30 Unit Labor Costs (2Q P): exp. 1.80%, prior 4.50% 10:00 Wholesale Inventories MoM (Jun): exp. 0.00%, prior 0.10% 10:00 Wholesale Trade Sales MoM (Jun): exp. 0.50%, prior 0.50% 10:00 IBD/TIPP Economic Optimism (Aug): exp. 47.3, prior 45.5 12:00 DOE Short-Term Crude Outlook (Aug): prior 52.15 12:00 DOE Short-Term Mogas Outlook (Aug): prior 2.28 12:00 DOE Short-Term Diesel Outlook (Aug): prior 2.71 12:00 DOE Short-Term Ht Oil Outlook (Aug): prior 2.64 12:00 DOE Short-Term NatGas Outlook (Aug): prior 10.57 Mortgage Delinquencies (2Q): prior 4.77% MBA Mortgage Foreclosures (2Q): prior 1.74% Global Economics 04:30 GBP Manufacturing Production 04:30 GBP Goods Trade Balance 23:05 AUD RBA Gov Stevens Speaks Earnings Before the Open: Bitauto Holdings (BITA) Coach Inc (COH) Incyte Corp (INCY) Norwegian Cruise Line (NCLH) Wayfair (W) After the Close: Clean Energy Fuels (CLNE) Cyberark Software (CYBR) Exone (XONE) Fossil Group (FOSL) Infinity Pharma (INFI) Solar City (SCTY) SunPower (SPWR) Twilio (TWLO) Walt Disney (DIS) Yelp Inc (YELP)
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