T3’s Take 3: Microsoft, Morgan Stanley Earnings Drive New All-Time Highs – T3 Live
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T3’s Take 3: Microsoft, Morgan Stanley Earnings Drive New All-Time Highs


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By Michael Comeau

1) Microsoft, Morgan Stanley Drive New All-Time Highs

Bulls went to a happy place today, as post-earnings rallies from Microsoft (MSFT) and Morgan Stanley (MS) pushed the S&P 500 to a new all-time high at 2175.63 today.

Europe's SAP and Volkswagen also beat, which is helping the cause.

The action was impressive across the board.

The important biotechnology sector ripped, tech was strong, small caps outperformed, and the Japanese yen (which rises when traders are fearful) dropped hard.

If I had to nitpick, it would have been good to see more banks performing well on the Morgan Stanley report.

While many observers, myself included, have been pointing out that stocks are very heated on various technical and sentiment measures, the market once again taught traders an important lesson: trends can go a lot further and last a lot longer than may seem reasonable.

The S&P 500 finished 0.4% higher at 2173.02.

2) Crude Oil Comes Back

Oil prices rebounded today after data from the American Petroleum Institute and Energy Information Administration showed declines in US crude oil inventories.

WTI crude rose over $46 intraday, which helped boost equity market sentiment, though it didn't do much for energy stocks.

The S&P Energy ETF (XLE) fell -0.1%, while the Vaneck Vectors Oil Service ETF (OIH) dropped -0.2%.

However, year-to-date, energy stocks are still outperforming the major averages by a large margin — showing that the big panic oil bottom in February was a magnificent buying opportunity.

Of course, we have the benefit of 20/20 hindsight now…

3) The VIX Collapses

This morning, the VIX hit a new 2016 low at 11.40 as traders embraced the slow and steady bull market.

The VIX has not been this low since August 2015.

The low VIX implies that trader see very little volatility near-term, despite a host of geopolitical issues, election season in the US, as well as the ongoing wave of corporate earnings releases.

I expect an increase within the next 2 weeks as these readings tend not to last, but for now, the bulls remain fully in-gear.

P.S. Can You Trade Options Without Knowing the Greeks?

Click here for Mark Melnick's answer.