T3’s Take 3: Oil Moves, and That’s About It. Seriously.
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By Michael Comeau
1) Lousy, Lousy, Lousy Numbers
US economic data missed across the board today:
-Retail sales were flat in July vs. consensus of +0.4%
-PPI was -0.4% vs. consensus of +0.1%
-U. of Michigan Sentiment for August was 90.4 vs. 91.5 consensus
Let's dive in and look at the trend:
The Citi US Economic Surprise Index has surged this year — especially after the June 24 Brexit.
This indicates that economic data was beating expectations
However, it started diving with the weak July 29 GDP report.
So while one day of weak numbers isn’t worth getting excited over, the trend is indeed turning down and should be watched.
2) YAWN…
US stocks put in yet another remarkably boring low-volatility day.
The S&P 500 traded in a very tight 7-point range before finishing -0.1% at 2184.05. The Nasdaq and Russell 2000 also barely moved.
The real action today was in crude oil, which rose 2.7% to $44.65 after Saudi Arabia’s energy minister said OPEC may act to prop up the oil market.
We also saw a nice intra-day rebound in biotechnology and pharmaceutical stocks, which slumped yesterday.
The VIX dropped again today to reflect the lackluster action, though not everyone thinks that condition will last…
3) Jeff Cooper’s Volatility Play
This afternoon, T3 Live’s Jeff Cooper initiated a long trade in UVXY from $21.14:
An hourly SPX from 8/8 shows a possible Megaphone Top pattern on the hourlies.
The index is trying to stabilize at its 50 period on the hourlies here, but if it falters before the bell the Megaphone pattern will be triggered.
While this is a very short-term pattern, bull markets in a Friday (particularly summer Fridays) like to close at/near session highs so a meaningful extension to the downside before the close could indicate a reaction is on the table next week.
Let's initiate a PILOT long in UVXY, which is a leveraged volatility play.
Timed correctly, UVXY is very explosive. But keep in mind this is a very volatile vehicle and may not be for everyone.
Last August it went from $130 to $450 in 9 trading days.
Click here for more information on Jeff Cooper’s Daily Market Report
Monday’s Trading Preview
US Economics (Time Zone: EDT)
08:30 Empire Manufacturing (Aug): exp. 2, prior 0.55
10:00 NAHB Housing Market Index (Aug): exp. 60, prior 59
16:00 Total Net TIC Flows (Jun): prior -$11.0b
16:00 Net Long-term TIC Flows (Jun): prior $41.1b
Global Economics
Sunday
19:50 JPY GDP
Monday
00:30 JPY Industrial Production
09:00 CAD Existing Home Sales
21:30 AUD RBA Aug. Meeting Minutes
Earnings
Before the Open:
500.com (WBAI)
After the Close:
Fabrinet (FN)
Vipshop Holdings (VIPS)
Sysco (SYY)
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