T3’s Take 3: Apple Shines in Mixed Markets

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1) Mixed Markets

After 3 days of big ups and downs, the S&P 500 stayed stuck in first gear today by falling just -0.1% to 2125.77.

However, there was plenty of action below the surface.

For example, the Nasdaq Biotech ETF (IBB) rose 1.2% on Allergan's (AGN) acquisition of Vitae (VTAE).

Meanwhile, energy stocks got slammed on a decline in crude oil.

We also saw weakness in banks ahead of tomorrow's big batch of economic numbers.

US economic data has been deteriorating since late July, and if the streak continues tomorrow, traders will continue backing off their rate hike bets.

Fed Funds futures now imply a 53% chance of a December rate hike, down from 60% last week.

2) Options Traders Go Gaga for Apple

Despite the middling broader action, Apple (AAPL) rallied another 3.5% today on continued optimism regarding iPhone 7 sales.

However, the big action was was in Apple options.

Over 1.4 million Apple call options traded today — over 4 times the 10-day average.

And typically, 1.5 Apple calls trade for each put.

Today, 2.5 Apple calls traded for each put.

It's safe to say that traders are feeling incredibly optimistic about Apple's prospects, but beware: the danger of a sell-the-news reaction is growing.

3) Jeff Cooper on HES

Just before the close, T3's Jeff Cooper initiated a short of Hess Corp. (HES), saying the following:

We should already be short as HES triggered a Rule of 4 Sell last week.

It backtested its 200 day and looks like it's in a runaway downside move.

We are going short here at the market using a 1.50 stop.

P.S. Don't forget to take our prop trading quiz.

Thursday's Trading Calendar

US Economics (Time Zone: EDT)

08:30 Empire Manufacturing (Sep): exp. -1, prior -4.21
08:30 Current Account Balance (2Q): exp. -$121.0b, prior -$124.7b
08:30 Retail Sales Advance MoM (Aug): exp. -0.10%, prior 0.00%
08:30 Retail Sales Ex Auto MoM (Aug): exp. 0.20%, prior -0.30%
08:30 Retail Sales Ex Auto and Gas (Aug): exp. 0.30%, prior -0.10%
08:30 Retail Sales Control Group (Aug): exp. 0.40%, prior 0.00%
08:30 Initial Jobless Claims (9/10): exp. 265k, prior 259k
08:30 Continuing Claims (9/3): exp. 2150k, prior 2144k
08:30 PPI Final Demand MoM (Aug): exp. 0.10%, prior -0.40%
08:30 PPI Ex Food and Energy MoM (Aug): exp. 0.10%, prior -0.30%
08:30 PPI Ex Food, Energy, Trade MoM (Aug): exp. 0.10%, prior 0.00%
08:30 PPI Final Demand YoY (Aug): exp. 0.10%, prior -0.20%
08:30 PPI Ex Food and Energy YoY (Aug): exp. 1.00%, prior 0.70%
08:30 PPI Ex Food, Energy, Trade YoY (Aug): prior 0.80%
08:30 Philadelphia Fed Business Outlook (Sep): exp. 1, prior 2
09:15 Industrial Production MoM (Aug): exp. -0.20%, prior 0.70%
09:15 Capacity Utilization (Aug): exp. 75.70%, prior 75.90%
09:15 Manufacturing (SIC) Production (Aug): exp. -0.30%, prior 0.50%
09:45 Bloomberg Consumer Comfort (9/11): prior 44
10:00 Business Inventories (Jul): exp. 0.10%, prior 0.20%
10:30 EIA Natural Gas Storage Change (Sep 9): exp. 55, prior 36
10:30 EIA Working Natural Gas Implied Flow (Sep 9): exp. 55, prior 36

Global Economics

03:30 CHF Libor Rate

04:30 GBP Retail Sales m/m
07:00 GBP Official Bank Rate

Earnings

Before Open:

None of Significance

After Close:

Oracle Corp (ORCL)