T3’s Take 3: Do You Feel the Heat Around the Corner?

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“Don't let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you feel the heat around the corner.”

-Neil McCauley, as portrayed by Robert DeNiro in Heat

Before I get started, I'd like to invite you to check out the replay of our latest webinar Why You Shouldn't Fear Forex.

1) Is that the Heat Around the Corner?

For what seems like the 900th day in a row, the S&P 500 failed to make a substantial move.

The index fell -0.2% to 2170.95 — far from a disaster — but tension is starting to appear on the tape.

The index is now trading below its lost its 8 and 21 day exponential moving averages, indicating a loss of short-term momentum.

Crude oil is almost 10% off its highs. (more on this below)

Biotechnology, which has been slumping since Presidential candidate Hillary Clinton's attack on Mylan (MYL) last week, continued its losing streak.

The Nasdaq Biotech ETF (IBB) recently lost its 20 day moving average, and it is sitting right on top of its 50 day moving average — a break of which could spook traders.

However, keep in mind that the bears have not been able to score a real victory since June 27, when the S&P fell -1.8% post-Brexit.

Since then, we have not had a single 1% down day.

2) Crude Oil Takes a Big Hit

WTI crude oil dropped over 3% below $45 today on another bearish inventory report.

The E.I.A. said US crude stocks rose 2.3 million barrels last week, which was well above the 1.3 million consensus.

This was the second large surprise build in a row, giving traders another reason to take profits ahead of the September OPEC meeting in Algeria.

There has been assorted chatter that OPEC will announce a production freeze at meeting, but that's clearly up in the air.

3) The Hawk Trade Rages On

The big hawk trade — long US dollar, long banks, and short gold — is still going strong on hopes of more Fed rate hikes.

In the equity markets, the gold miners (GDX) continue to take the brunt of the damage, with GDX falling -1.6% after yesterday's -4.9% decline.

And on the flip side, regional banks (KRE) continue to be a source of leadership.

KRE is a good ETF for active traders to follow since it makes bigger moves than the better-known S&P Financials ETF (XLF).

Thursday's Trading Calendar

US Economics (Time Zone: EDT)

07:30 Challenger Job Cuts YoY (Aug): -57.10%
08:30 Nonfarm Productivity (2Q F): exp. -0.60%, prior -0.50%
08:30 Unit Labor Costs (2Q F): exp. 2.10%, prior 2.00%
08:30 Initial Jobless Claims (8/27): exp. 265k, prior 261k
08:30 Continuing Claims (8/20): exp. 2145k, prior 2145k
09:45 Bloomberg Consumer Comfort (8/28): prior 45.3
09:45 Markit US Manufacturing PMI (Aug F): exp. 52.1, prior 52.1
10:00 Construction Spending MoM (Jul): exp. 0.50%, prior -0.60%
10:00 ISM Manufacturing (Aug): exp. 52, prior 52.6
10:00 ISM Prices Paid (Aug): exp. 54.8, prior 55
10:00 ISM New Orders (Aug): prior 56.9
10:30 EIA Natural Gas Storage Change (8/26): exp. 42, prior 11
10:30 EIA Working Natural Gas Implied Flow (8/26): exp. 42, prior 11
12:25 Fed's Mester Speaks to Kentucky Philanthropy Initiative
Wards Domestic Vehicle Sales (Aug): exp. 13.50m, prior 13.77m
Wards Total Vehicle Sales (Aug): exp. 17.20m, prior 17.77m

Global Economics

03:15 EUR Spanish Manufacturing PMI
04:30 GBP Manufacturing PMI

Earnings

Before Open:

Campbell Soup (CPB)
Ciena Corp (CIEN)
Joy Global (JOY)
Lululemon Athletica (LULU)

After Close:

Ambarella (AMBA)
Broadcom (AVGO)
Smith & Wesson Holding (SWHC)