The Morning Hammer: Most Boring Stock Market Ever

1) YAWN!

I like being right… but not today.

I've been calling for a sideways grind in August but it's growing painful.

We had a nice up day on Friday with some real movers, but today, the indices are barely moving, and outside of energy and biotech, there aren't many real movers.

It feels like run-of-the-mill consolidation… and I've had enough of it already.

2) Headline of the Day

“Mattress Firm Ratings May Be Raised by Moody's”

That's a pretty good illustration of how sleepy things are, and how boring the news flow is.

3) Oil!

Oil looks good so far today, and it's driving a nice move in high-yield, and a big rip in oil service names, which took a decent hit off early June highs.

Traders will be especially eager for this week's inventory data (API after the close Tuesday, EIA at 10:30 a.m. ET Wednesday).

If we get bullish numbers, odds are WTI crude slinghots above $45.

4) High-Yield Too Hot?

One my favorite underappreciated sentiment indicators is discount levels on closed-end funds, because they are a sign of serious disgust/overenthusiasm on the part of individual investors.

And with oil's big rebound off the February 11 lows, high-yield closed-end funds are looking a little frothy these days.

One such fund is the PIMCO Corporate & Income Fund (PCN). At the beginning of the year, it traded at around a -4.5% discount. Now it's at an 8.1% premium.

Most other funds I follow have seen similar gains.

5) Energy Funds Though…

However, energy closed-end funds look a little cheap. My custom index is trading at a -5.5% discount vs. a 1-year average of -4.6%.

So if you think oil will continue to rally, you can take a look at funds like KMF, GMZ, and GER, which are all trading at large discounts relative to recent averages.

If oil rallies, they will also likely deliver alpha relative to something like XLE.

But beware… energy closed-fund funds are extremely volatile. They're like trading Exxon (XOM) with the beta of Tesla (TSLA).

100% FREE eBook

Learn powerful concepts from the $795 Trading the Pristine Method Course.

Submit