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T3’s Take 3: Bad News Banks Beat Merger Mania!
Want to Learn to Trade With Our Experts? Check Out These 2 FREE Events: Start Prop Trading the Right Way How to Generate Big Income With Options 1) M&A Fever Today was a good day for Wall Street dealmakers as 2 sizeable deals were announced, with another Twitter (TWTR) takeover rumor serving as the icing on top. Privately-held outdoors retailer Bass Prop Shops is buying Cabela’s (CAB) for $5.5 billion. The combined company will have nearly 200 stores in the United States. Legendary bond investor Bill Gross also has a new employer, as his company Janus Capital (JNS) will be acquired by UK-based asset manager Henderson Group Plc. Meanwhile, Bloomberg reported that Google (GOOGL) may be kicking the tires on Twitter (TWTR) regarding a possible link-up. In recent weeks, Twitter shares have skyrocketed on reports that it could be acquired by companies including Salesforce.com (CRM), Microsoft (MSFT), and even Disney (DIS). Twitter shares rose 4.0% to $23.97 today. 2) US Stocks Pull Back The S&P 500 pulled back -0.3% as the banking industry came under fire again. European banks fell today after Deutsche Bank (DB) failed to announced a smaller settlement with the Department of Justice, which handed the bank a $14 billion tab over its mortgage backed securities practices. Well Fargo (WFC) continued its downtrend on a pile of negative news, including a loss of business with the state of Illinois. Democratic Presidential candidate Hillary Clinton also attacked the bank in a speech in Toledo, Ohio. Massachusetts Secretary of the Commonwealth William Galvin accused a Morgan Stanley (MS) unit of “dishonest and unethical conduct” in in state dealings. The S&P Financial ETF (XLF) fell -0.5% today. Gold miners, utilities, and real estate stocks all fell on stronger-than-expected US economic data, which pushed up the dollar and interest rates. The Nasdaq slightly outperformed today as select names like Netflix (NFLX) and Tesla (TSLA) staged strong rallies. 3) Rule of 4 Sell Signal? This afternoon, my good friend Jeff Cooper once again keyed on the widely-watched 2148 level in the SPX. Here’s what he had to say: The Daily Swing Chart has turned right back down as the SPX trades below Friday’s low this morning. There is a 3 point rising trend line on the hourlies that now ties to around the key 2148 level. So if this is breached, it will trigger an hourly Rule of 4 sell from September’s pennant to kick off October, a potentially poor harbinger for the what is often a wicked month. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 08:05 Fed’s Lacker Speaks at West Virginia Economic Outlook Meeting 09:45 ISM New York (Sep): prior 47.5 19:50 Fed’s Evans Speaks on Economy and Policy in Auckland, NZ Global Economics 03:00 EUR Spanish Unemployment Change 04:30 GBP Construction PMI 20:30 AUD Retail Sales m/m Earnings Before Open: Darden Restaurants Inc (DRI) After Close: None of significance
Continue Reading -->Wells Fargo May Be Buyable Soon… and 4 Other Thoughts on Today’s Market
1) Wells Fargo’s Trip Wells Fargo (WFC) is coming under a ton of heat for its fake credit card account scandal, and it looks like it’s about to form a triple bottom with its February and June Brexit lows. I’m putting it on my long radar. I’m sure the company will pay a penalty, beef up employee oversight, and get a stern talking to from the powers that be. The optics are awful, but this scandal will eventually pass. If British Petroleum (BP) came back from its oil spill, Wells Fargo can recover from this. 2) Buy the Bad News? Today’s economic data was mostly lousy, yet the hawk trade — dollar up, banks up, gold down — is still going. So it looks like traders just weren’t surprised because the data has been so lousy lately. Fed funds futures barely budged. They’re pricing in a 50% chance of a December rate hike, essentially unchanged today. Or maybe folks just want to see CPI tomorrow before pressing dovish bets. 3) The Apple Market As I write this, the DJIA is up 58 points. Apple (AAPL) accounts for 23 of those points. I thought the stock was peaking near-term yesterday, but it’s above $115 for the first time since December 2014. 4) Donald’s Health Donald Trump released lab test results for the first time today, showing normal cholesterol, blood pressure, liver function, and thyroid function. Now I try to steer clear of politics, but people are increasingly focused on the health of the candidates. Anything that’s good for Donald tends to be good for biotech (IBB) — even though like Hillary, Donald has called for negotiating Medicare drug prices. 5) Sentiment Update AAII sentiment is 27.9% bullish, well below the 38.5% long-term average. The ISE Sentiment Index is at 76 this morning, indicating moderate bearishness. Yesterday’s Investors Intelligence survey showed that 49% of traders are bullish, slightly down but still fairly high. So sentiment remains very mixed. Traders are spooked a little, but not freaked out.
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