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T3’s Take 3: The Bull Just Keeps on Grindin’
Why are so many traders terrified of forex? This afternoon, my buddy Kurt Capra is hosting a FREE webinar on how you can get started in the lucrative, exciting world of forex. Click here to learn more. 1) Hot Oil! Crude oil was weak in the early going, but shot up intraday after Reuters reported that Iran may support a production freeze at the September OPEC meeting. Oil has been seeing some minor profit-taking on speculation that OPEC may disappoint the market by keeping production unchanged. The push up in oil helped energy stocks outperform, and the S&P Energy ETF (XLE) rose 0.7%. Oil service stocks were also decent, with the Vaneck Vectors Oil Service ETF (OIH) up 0.5%. 2) 31 Days of Nothing We’ve now gone 31 days without 1% move in the S&P 500 as the index continued its slow upward grind with a 0.2% rally to 2186.90. Traders were encouraged by solid European economic data and the aforementioned oil rally. Housing stocks were up big on strong earnings from Toll Brothers (TOL) and impressive US New Home Sales, which are at a multi-year high. Biotechnology and pharmaceutical names also outperformed for the second straight day, and regional banks were up nicely as Treasury yields rose. Gold miners were in the decliners’ column on a slump in gold prices. 3) Second Term Parallels Today, my colleague Jeff Cooper pointed out that the market fell hard at the end of Presidents’ Bill Clinton and George W. Bush’s second terms: The market rallied into September 1, 2000 as Clinton’s second term was coming to a close, and then dropped 41.5% into its November low. The market topped on August 15, 2008 as Bush’s second term was ending, and lost 48.4% going into a November low. Continue reading… P.S. Click here to sign up for our forex event! Wednesday’s Trading Calendar US Economics (Time Zone: EDT) 07:00 MBA Mortgage Applications (8/19): prior -4.00% 09:00 House Price Purchase Index QoQ (2Q): prior 1.30% 09:00 FHFA House Price Index MoM (Jun): exp. 0.30%, prior 0.20% 10:00 Existing Home Sales (Jul): exp. 5.51m, prior 5.57m 10:00 Existing Home Sales MoM (Jul): exp. -1.20%, prior 1.10% 10:30 DOE U.S. Crude Oil Inventories (8/19): exp. -850k, prior -2508k 10:30 DOE Cushing OK Crude Inventory (8/19): exp. -300k, prior -724k 10:30 DOE U.S. Gasoline Inventories (8/19): exp. -1700k, prior -2724k 10:30 DOE U.S. Distillate Inventory (8/19): exp. 500k, prior 1939k 10:30 DOE U.S. Refinery Utilization (8/19): exp. -0.55%, prior 1.30% 10:30 DOE Crude Oil Implied Demand (8/19): prior 17148 10:30 DOE Gasoline Implied Demand (8/19): prior 10216.4 10:30 DOE Distillate Implied Demand (8/19): prior 4754 Global Economics 04:30 GBP BBA Mortgage Approvals Earnings Before Open: Express Inc (EXPR) After Close: GUESS? Inc (GES) HP Inc (HPQ) Williams-Sonoma (WSM) Workday Inc (WDAY)
Continue Reading -->The Morning Hammer: Something’s Gotta Give!
Don’t Fear Forex… Attend my buddy Kurt Capra free webinar tonight and learn why so many stock and options traders are embracing the lucrative world of forex. Click here for more info. European markets are up this morning on solid economic data. Euro area PMI rose to 53.3 in August from 53.3, which implies little impact from the Brexit. France’s was better than expected, while Germany’s was a little weaker. On the US economic calendar, we’ve got the Markit US manufacturing PMI, Richmond Fed, and New Home Sales. Best Buy (BBY) beat by a mile and is up 14%, extending what’s generally been a pretty decent earnings season for big box retailers. Meanwhile, the Bank of Montreal (BOM) beat on strong retail banking activity. SPX futures are in modestly positive territory following yesterday’s yawnfest. Biotech is indicated higher following massive outperformance on the back of the Pfizer (PFE)/Medivation (MDVN) deal. Bloomberg is reporting that Bayer and Monsanto (MON) are closer to closing their deal, which has been stuck on issues like the price and termination fee. Crude oil is down again this morning after Iraq’s Oil Minister asked foreign oil companies to increase oil production and exports. The dollar is down after making solid gains on hawkish comments from the Fed’s Fischer and other officials. Some traders may be taking their feet off the gas ahead of FOMC Chair Janet Yellen’s Jackson Hole speech this Friday. I’m not in the business of trying to game the Fed, so I’ll just point out that in June, Yellen came out dovish after a barrage of hawkish comments from Fed officials. So please, tread carefully. Otherwise, we’re back to the same old grind. The action’s been so lame that it makes the April-May lull look like a firestorm in comparison. I am long VIX calls and I’m sitting on a loss of about 8%. That’s not the end of the world, but now I’m in that no man’s land where I’m worried about getting shaken out at the worst possible moment. But I’m going to stick it out for now. Arguing with the market is for fools, but we’ve gone 31 days without a 1% move. And we’ve gone 39 days without a 1% down move. Something’s gotta give. Right? P.S. Don’t forget to sign up for Kurt Capra’s free forex trading event!
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 -->The VIX Has Bottomed… and 4 Other Thoughts on Today’s market
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! 1) Return of Volatility? Volatility may finally be returning. As you can see in this chart, the VIX hit a bottom last week at 11.02. It’s now above 12 and I think it moves much, much higher from here. (full disclosure: I am long VIX calls) We just went through 26 straight days without a 1% move in the SPX. Volatility is mean-reverting. You never know exactly when the pendulum swings back, but I believe we are eyeing the seeds of it. For example… 2) Russell Down? The Russell 2000 is underperforming today, which is a reversal of the recent trend. This could be a sign that traders are growing a little wary and taking some profits off the table. Right now, the Russell is at the lows of the day. If it makes even lower lows, the bulls will get more nervous. 3) Biotech! The bios are underperforming a little bit today, but like the Russell, traders will get nervous if we see a real breakdown here. For the past couple of years, biotech has been ground zero for speculative money, and when it breaks higher, the bulls tend to feel pretty good. And of course, the flipside is equally true. Bulls get nervous when the bios give up. IBB needs to hold $290ish. 4) Apple & Berkshire Apple’s (AAPL) mega rally off $91.50 was ignited by Berkshire Hathaway’s buy of the stock. Today, it’s getting a little pop on news that Berkshire increased its stake. It would be funny if Warren Buffett marked the bottom and the top. 5) Tomorrow Is a BIG Day Tomorrow we’ve got crude oil inventories and the FOMC Minute, both of which could set off some fireworks. Traders are once again completely confused over the Fed’s direction, and maybe we get some clues as to whether a September rate hike is on the table as some folks have intimated. And with the marketing teetering back and forth, maybe traders get worried if oil breaks down. 6) Twilio! (BONUS ROUND!) Twilio (TWLO) is the current poster child for momentum trader wackiness. It’s still going strong even though some others like ACIA and FN are falling off. If TWLO follows suit, it could be another sign of profit-takers cashing in. By the way, a lot of traders are talking about TWLO as if it’s a sure-thing short, but I would not touch it on the short side. P.S. Have you signed up for Dave Green’s FREE trading webinar yet?
Continue Reading -->Futures Update: NDX/NQ Make All-Time Highs
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! As NDX/NQ make new all-time highs, so does ES, although that has been routine for some time. Projected risk for NQ is at 4858.50, but we could pause before that. Support is at 4818.50, the initial upside risk level is at 4834.25. GC is still holding on for dear life, thanks to a Yen bid. Resistance is at 1348.40 and 1350.90. ZN is still trading inside the NFP value area, 132’025/132’190 (shaded on chart). It’s interesting to note the confluence at 132’190 between the NFP value area high and the ten year auction VPOC (volume point of control). Remember the auction high yield of 1.503%, it could be our mean reversal level for the next few days. The caution flag for equities gets raised should ZN move back above 132’120.
Continue Reading -->Crude Oil Goes Boom… and 4 Other Thoughts on Today’s Action
Attention! This afternoon, T3 Live’s Dave Green is hosting a FREE trading webinar. Click here to learn how Dave crushes the market! 1) Crude Rips Crude oil is slamming above $43 on an International Energy Agency report saying the market will continue to rebalance as demand from refiners grow. Predictably, energy stocks (especially oil service names) are doing great work on the upside, and it’s also pulling up high-yield (HYG). The bull run off post-Brexit lows may ‘feel’ long in the tooth, but strong crude oil could help extend it. 2) If You’re a True Believer… If you think oil’s going to continue running higher, look at energy closed-end funds. They are still showing large discounts, which could close if oil prices rise. Names to watch include KMF, KYE, and GMZ. 3) ANOTHER Record High? Assuming crude oil can keep moving higher, SPX may be in for yet another record high today. A colleague commented today that since the market’s so high, it’s probably destined to crash soon. I’m technically short the market, but I fully understand the reality on the ground: what goes up must come down — but before it comes down, it may go up. A lot. 4) Still No Vol The VIX had a 13% spike from Tuesday’s low to Wednesday’s high, but it’s round-tripped most of the move. I popped in a daily chart of the VIX vs. 20-day realized volatility on the SPX: Both are at yearly lows as the sideways grind continues. Unless something drastic happens, we’re going on 24 days without a 1% move. I really should have gone on vacation this week because the action is so boring! 5) Bio-Blah Biotech is up a little but it’s still showing pretty anemic action overall. It’s partly good old-fashioned consolidation after a big run higher, but it could also be a sign of exhaustion. If IBB starts surging towards $300, I imagine it would give the bears quite a scare. Click here to check out Dave Green’s webinar today!
Continue Reading -->Webinar Replay: How to Start Trading Like a Pro
In this webinar, T3 Trader Kurt Capra breaks down his technical analysis methodology, including: Why it’s important to focus on price first and foremost How to be part of the 1% of traders that thrive The T3 Buy Setup you can start using today For more information on Kurt’s upcoming Emerging Trader 5-Day Lab, please call 1-888-998-3548, or email info@t3live.com.
Continue Reading -->Maybe the Brexit Didn’t Kill Planet Earth After All…
European stocks are up this morning after German’s Ifo’s business confidence reading came in better-than-expected, implying once again that Brexit-related fears have gone too far. As we’ve been noting on the Virtual Trading Floor again and again, global economic data has actually outperformed expectations since the Brexit. Below, you can see 2 charts showing the Citi economic surprise indices for Europe (first chart) and the US (second chart): In both cases, the trend is UP, not down. Plus this morning, Irish airline Ryanair kept its 2017 profit forecast in place even though presumably, the Brexit and recent string of terrorists attacks could impact air travel volume. And in fact, traders are once again pricing in Fed rate hikes this year. Fed funds futures now show a 45% implied probability of a rate hike this year, up from 9% after the Brexit. So faith in the economy is returning… whether that marks a near-term top remains to be seen. We’ve got some deal activity this morning. Yahoo (YHOO) is selling its main web properties to Verizon (VZ) for $4.8 billion. Yahoo will operate as a publicly-traded investment company with holdings in Alibaba (BABA) and Yahoo Japan. CEO Marissa Mayer says she will stay with Yahoo. AMC Entertainment (AMC) raised its bid for Carmike Cinemas (CKEC) by about 10% to $1.2 billion. SPX futures are as flat as an ironing board this morning. We are seeing minor profit-taking in commodiites, with oil, gold, and silver all off as US Treasury and Euro bond yields rise. The 10-year German bund is still negative though. Sentiment measures including CBOE equity put/call, VIX spreads, and the II survey still show that traders are in a pretty bullish mood, so the best past forward may be a little break that lets moving averages catch up, and lets the bears reload. I still think we’re heading for a summer stalemate that looks like the amazingly boring April-May stretched, and that’s ultimate a good scenario for the bulls. My main worry now is that crude oil just trades horribly. Crude was a major catalyst for equities off the February 11 low, and with oversupplly worries coming back to the forefront, it could just as easily serve as a downward catalyst. It would also be nice to see the Nasdaq and Russell 2000 confirm the SPX all-time high. But it’s very rare that markets behave cooperatively across the board, so keep your eyes on the important stuff. As long as biotech (IBB), high-yield (HYG), and the Russell don’t break down, equities will likely keep it together. And oh yeah — the Pokemon-driven Nintendo hype train just got derailed. The stock is down 18% today after investors that Nintendo’s clearly not going to make enough money from Pokemon to justify a doubling in the stock price.
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