Category Archives for Articles
FREE Preview: Redler All-Access
Welcome to your FREE preview of T3 Live’s Redler All-Access newsletter. Redler All-Access gives you a complete trading plan from T3 Live Chief Strategic Officer Scott Redler, whose technical analysis expertise is frequently sought by CNBC, Fox Business, Bloomberg and more. Below, you’ll read a complete edition of the Redler All-Access Morning Note, which gives thousands of traders from across the globe their daily game plan. You’ll also view Scott’s extended Morning Call video. Today’s 23-minute edition, spanning 23 minutes, includes actionable analysis of 20+ charts including SPX, SPY, FAS, GS, JPM, FB, AAPL, NVDA, and NTES. But first, please click the video screen to get a quick introduction to Scott’s approach to the market: Health CheckMarch 20, 2017 Morning Call Video (click the screen to watch) Please Note: this video is NOT the same as the free Morning Call Express video Scott publishes daily. The Morning Call Express is a brief 5-7 minute look at the action. The Morning Call included with Redler All-Access is over 20 minutes long, with much more extensive analysis of stocks and ETF’s primed to move. By Scott RedlerWe have mixed markets to start the week with a bit of a cautious tone.In Europe, the DAX and CAC are -0.3% with the FTSE -0.2%.In Asia, the Nikkei is on holiday. The Shanghai is +0.4% and the Hang Seng is +0.8%.The G20 meeting had a protectionist tone.Last week was an interesting one as the Fed raised rates. There was a bit of a debate on whether Fed Chair Janet Yellen was dovish or hawish.The markets tried to resume the rally but didn’t have much power.SPX ignited above the 2373 area to make a lower high and it’s right back there. If we get a hard break below that pivot, the bears could point to a double top with a “train tracks”-type breakout failure. But we’ll see what happens.On Friday, I was away at a wedding and all my tight upper-level stops got hit. So I will see if we get better entries, or if things turn to more of a waiting game. Let’s stay light on our toes.Tech still holds up best. Small caps are trying to hold the 50 day. Energy is already back below the 200 day. The banks and bios did show a little relative weakness late last week.The biggest event this week is Thursday’s House floor vote on Ryan’s healthcare bill.If this doesn’t pass, questions will be raised about GOP tax reforms. Things could be quiet until then. SPY went ex-dividend so pricing is a bit odd. We’ll use SPX for better levels. Friday’s SPY low is $237.03. 2377 is the SPX low. If that doesn’t get reclaimed, 2370-2373 (the 8 & 21 day) is the next important intermediate support spot.Small caps held up a bit better late last week. We’ll see if that continues. IWM’s 50 day support is $136.60. Use that if you’re trying to be long. If it breaks it, be careful because it could be time to flip short. Friday’s low is $137.31.Bios lost some momentum as AMGN got hit very hard on bad news. IBB needs to prove it can hold above $293.57. Like a lot of traders, I got stopped out last Thursday. It’s now below the 8/21day. If this breaks and closes below Friday’s lows, it could fade back into the base with the 50 day down near $286.Banks didn’t rally on Wednesday when markets reacted positively to the Fed. Then on Friday, many names dragged the indices lower. I would love to see these names touch the 50 day for test longs after getting stopped out last week.FAS has the 50 day at $49.90. Friday’s low is $47.18.JPM has the 50day at $88.29, Friday’s low is $90.65.GS has the 50 day at $243. Friday’s low is $243.86.BAC has the 50 day at $23.84. Friday’s low is $24.83.We’ll see if they hit these levels and stay below, or reclaim Friday’s lows. JPM is a good indicator to watch.GS had a ugly candle Friday. Tech still acts best. QQQ is still above the 8 day. We need to see if that continues. The 8 day is $131.62. The 21 day is $130.80. If tech starts to weaken, perhaps markets weaken a bit. If these upper moving averages hold, it will be hard for the bears to growl too loudly. NFLX finally woke up again. It cleared $142 and hit a high of $146.50. Now it needs to hold $143.40 to build again for another potential new high.AMZN is very tight and out of play but it’s holding right under breakout levels. Some are long vs. $247. It would need a high-volume breakout above $857, then $860 to wake up.GOOGL made new all-time highs last week. It’s been grinding along the 8 day without much power. Now see if it holds $864 to clear $874.42 again.FB broke above our $140 target. It’s been riding the 8 day higher since January when it reclaimed all moving averages. Now the 8 day is $139.14 with the all-time high at $140.34.TSLA was a nice new trade for us from last week. It ignited above the $248 lower pivot area and hit $265.75 Thursday. Now see if it holds $259ish to form a new flag for more upside. I Tweeted to Redler All-Access that I turned some of the calls into a spread.Some Chinese names act well:BABA has been very choppy but hit a high of $106.50 Friday before pulling in a bit. Now, if it holds the $104 area, it can stay in the game to grind towards $110+. Some are long vs. the earnings gap.NTES has been consolidating its post-earnings move and came back to test the gap. We can be long vs. $278. See if it clears and holds $292 to get back towards all-time highs.MOMO cleared its base on big earnings. It held above $30 and is back towards the highs. Now see if it holds $34.01 to keep upper momentum.Other tech:AAPL has been rising above the 8 day all of 2017. It had an ugly candle
Continue Reading -->T3’s Take 3: The Go-Nowhere Market Is Still Going Nowhere
1) Another Day, Another Yawn I was really hoping that the Fed rate announcement and Dutch elections this week would spur some actual, real-life, lasting volatility. But following Wednesday’s post-Fed power rally, the market went right back into snooze mode. The S&P 500 fell -0.1% to 2378.25, with the Nasdaq flat. The Russell 2000 showed a little relative strength, which was nice to see. We also saw key large-cap tech stocks like Apple (AAPL) and nVidia (NVDA) rally intraday to finish near the highs of the day. Regional banks (KRE), which have been key in the post-election rally, also made a nice move off its morning low. 2) Levels to Watch in SPX This morning, T3 Live Chief Strategic Officer Scott Redler issued analysis of the S&P, saying the following: “Watch 2370-2377. We need to hold above that. Otherwise, more choppy downside can happen.” The S&P actually bottomed today at 2377.74, just missing Scott’s key range that would indicate trouble is ahead. So the bulls remain out of reach of the frustrated bears. 3) Quick Sentiment Update In yesterday’s Weekly Sentiment Update, I pointed out that the ISE Sentiment Index showed a huge surge in call options buying. But call buyers backed off quickly today. The ISE Sentiment Index fell to the low 70’s, indicating that traders went right back to buying up puts in anticipation of downside.. Increased put buying is actually good for the bulls, because it indicates that traders are still somewhat nervous. It’s very rare for traders to be skittish at the top.
Continue Reading -->Weekly Sentiment Update: The Crowd Is Neutral but Options Traders Are Running Wild
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. But let’s look at the actual numbers to see how the crowd actually feels. Last week, we saw sentiment fall to neutral territory after two weeks of strong bullishness. (see here and here) So with the Fed out of the way, let’s see if anything’s changed using our 5 primary sentiment indicators: 1) VIX Spread – Bullish The 3-month VIX spread is at +3.01 which indicates that traders are moderately bullish. 2) CNN Fear & Greed Index – Neutral The Fear & Greed Index is at 53, down from 66 last week. F&G operates on a 1-100 scale, and 53 is basically neutral. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 31.2% of individual investors are bullish, which is well below the long-term average of 38.5%. Bullish AAII Sentiment has been below the long-term average for 7 of the past 8 weeks. 4) CBOE Equity Put-Call – Bearish The CBOE Equity-Put Call ratio was at 0.61 yesterday with a 3-day moving average is 0.68. This is slightly bearish. 5) ISE Sentiment – Bullish This is where things get really interesting. The ISE Sentiment Index is at an insane 304 this morning. That means 304 calls purchased for every 100 puts. We very rarely see reading this high, even in a hard rally. So there are a ton of post-Fed call buyers. , which is a bullish reading. The 10 day moving average is just 83, but I’ll call this bullish becasue of today’s extraordinary surge. Conclusion Out of 5 sentiment indicators, we have: -2 bullish -2 bearish -1 neutral So we’re still stuck in neutral territory, though the insane call buying indicated by the ISE Sentiment Index implies that traders are extremely optimistic near-term. With stocks creeping lower intraday, we’re about to see if those call buyers marked the top.
Continue Reading -->The Trouble With Crude Oil
The action in crude oil has been hideous as of late, as you can see in this weekly chart: To be fair, it doubled in a year, so some profit-taking may be in order. However, let’s hope it can resume the uptrend, or at least hold the uptrend in the $46-$47 area. The oil rebound off the $26.05 February 2016 low played a huge role in last year’s rebound. There’s been no volatility in 2017 but oil is certainly a candidate for messing up the party. Remember, oil affects a lot more than energy stocks. Many regional banks have large energy loan books, and weak oil means more defaults. There are also an awful lot of high-yield energy bonds that would suffer. And historically, weak high-yield markets means trouble for the broader equities market. For now, the bulls remain in firm control, but oil could inspire the bears to finally step up after getting destroyed in the post-election rally.
Continue Reading -->Q&A: How to Judge an Economic Data Point
Dear Michael, How can you call the jobs report ‘Meh’? NFP came in at +235K and beat the street expectations. How is that meh? -Randy Dear Randy, The 235K headline number was fine, but that’s not the totality of the report. Average hourly earnings grew by just 0.2% vs. the 0.3% consensus, which offset the impact of the headline number beat. Plus, you have the remember that expectations were running very high headed into the report. On Wednesday, the ADP employment number beat by a mile. In addition, bonds have been sinking while the US dollar has been rising, indicating that traders have been anticipating the type of strong economic data that has bolstered the Fed’s case for rate hikes. How to Look at Economic Data Points In isolation, economic data points are completely useless. To properly understand them, you must bring them into context by doing 2 things: Measure them against expectations as set by economists and the market itself. Measure them against expectations as set by the market itself. First, let’s look at expectations as set by economists. News and data providers like Bloomberg and Reuters collect forecasts from various economists to determine a consensus forecast, which is a rough approximation of the market’s expectations. With economic statistics, the consensus forecast is determined by taking a median of the data set. Now, for last Friday’s jobs report, the consensus forecast (the median) was 190K. So 235K was a beat. Had the consensus forecast been 300K, 235K would have been disappointment. However, we must also take the actual market’s behavior, because they also play into expectations. As I stated earlier, bonds were falling headed into the report. This is because a strong report would support the case for more Fed rate hikes, which would push down bonds. But what if bonds rallied ahead of the jobs numbers? That would indicate that traders expected a miss in the jobs number. Admittedly, this is more art than science, and it’s generally only applicable to major economic data points like NFP, GDP, CPI, etc. But by focusing on how economic data is reported relative to expectations, you can get a sense of just how ‘good’ that data actually is. And just so you don’t forget, I’ll say it again: In isolation, economic data points are completely useless. To properly understand them, you must bring them into context by doing 2 things: Measure them against expectations as set by economists and the market itself. Measure them against expectations as set by the market itself.
Continue Reading -->T3’s Take 3: The US Dollar Sinks on a ‘Meh’ Jobs Report
1) A ‘Meh’ Jobs Report This morning, the US Bureau of Labor Statistics said that 235,000 nonfarm payrolls were added in February, beating the 200,000 consensus. The unemployment rate was 4.7%, in-line with expectations. However, average hourly earnings grew by just 0.2%, missing the expected 0.3% reading. That drove profit-taking in the US dollar, which has been moving higher in anticipation of a March rate hike. That said, the headline number was still pretty good, and traders are unwavering in their belief that March is in play. The CME’s FedWatch Tool shows that markets are pricing a 91% probability of a rate increase this month. 2) The Big Yawn Market While I was hoping for some volatility on today’s jobs numbers, we didn’t it. Stocks once again traded in a very tight range, with the S&P 500 trading up 0.3%. The Russell 2000 and S&P 500 also made modest gains. Like the US dollar, bank stocks saw profit-taking on the disappointing hourly earnings number. Meanwhile, rate-sensitive groups like gold miners and utilities caught a bid. The brightest spot of the day was biotech, which rallied nicely in the afternoon on speculation that sector leader Gilead (GILD) is about to announce an acquisition. Plus, President Trump is expected to appoint Scott Gottlieb, a doctor with deep ties to the pharma industries, as FDA commissioner. Presumably, he’d create the friendlier regulatory environment that Trump has promised. 3) Neutrality Last week, various sentiment indicators showed that traders were getting very cocky. This week, the picture is quite mixed. The AAII Sentiment Survey showed that individual investors have become much more cautious, even though the major indices barely moved. Click here to read my full Weekly Sentiment Update.
Continue Reading -->Weekly Sentiment Update: Back to Neutral That Fast?
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. But let’s look at the actual numbers to see how the crowd actually feels. Last week, we saw sentiment climb to frothy territory. Now, let’s see if anything’s changed now that we’re seeing some signs of deterioration, most notably the relative weakness in the Russell 2000. 1) VIX Spread – Bullish The 3-month VIX spread is at +3.96, which indicates traders are still not concerned with volatility. This is a bullish reading. 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 66, down from 81 last week. F&G operates on a 1-100 scale, and 66 indicates moderate greed. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 30.0% of individual investors are bullish, which is well below the long-term average of 38.5%. It’s also slightly down from last week, which is a surprise to me. Bullish AAII Sentiment has been below the long-term average for 7 of the past 8 weeks. 4) CBOE Equity Put-Call – Neutral The CBOE Equity-Put Call ratio was at 0.72 yesterday, which is a 2 week high. The 3-day moving average is 0.63. This is basically neutral. 5) ISE Sentiment – Neutral The ISE Sentiment Index is currently at 112 (112 calls for every 100 puts) at yesterday’s close, which is a bullish reading. And the 10-day moving average is 84.1. Even though the 10-day moving average indicates high demand for puts relative to calls, I’ll call this neutral because it’s moved up quite a bit, and for the past year or so, the number seems to be perpetually low. In fact, I may have to boot it from these Weekly Sentiment Updates. Conclusion Out of 5 sentiment indicators, we have 2 bullish, 2 neutral, and 2 bearish. So after two weeks of undeniably bullish readings, traders are back in neutral territory. It’s not exciting… but it’s the truth.
Continue Reading -->Throwback Thursday: Two of Our Most Popular Articles
Meet the Traders! 8 Questions With Sami Abusaad 5 Reasons Forex Trading Might Be for YOU! Bonus Article: Trading: Trend Following vs. Counter-Trend
Continue Reading -->Q&A: Is the Russell 2000 Overbought?
Hi Mike, I’m a subscriber and I mostly follow Scott Redler’s Daily Recaps. I just noticed that wrote about sentiment. Anyway, I only trade TNA and TZA (3X Russell 2000 ETF’s). Don’t you think it’s way overbought? -Rolando The Russell 2000 has come 21% since its pre-election lows, so under the most basic rule of the market — what goes up must come down, eventually — it may be overbought. But let’s take a look at a chart of the Russell 2000 ETF (IWM). The Russell is pretty far above its 200 day moving average. However, prior to the last pop off the February lows, the Russell spent 2 months doing nothing. And now, IWM basically riding the 8 & 21 day moving averages and building a new trading range between $138 and $141. So from a big-picture perspective, the Russell may look a bit overbought — but that may not mean that it’s going to drop. It could very well drop into another low-volatility range which will allow it to work off the overbought condition. I’d watch to see if IWM tests the 50 day moving average, and how it behaves from there.
Continue Reading -->Weekly Sentiment Update: Bulls Are on Parade and Froth Is Setting In
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. But let’s look at the actual numbers to see how the crowd actually feels. Last week, we saw sentiment climb to undeniably bullish territory. Now, let’s see if anything’s changed following the market’s HUGE bull move off President Trump’s address to Congress. 1) VIX Spread – Bullish The 3-month VIX spread is at +3.88, which indicates traders are still not concerned with volatility. This is a bullish reading. 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 81, up from 75 last week. F&G operates on a 1-100 scale, and 81 is in extreme greed territory. 3) AAII Sentiment – Neutral The latest AAII Sentiment Survey shows that 37.9% of individual investors are bullish, which is right in-line with the long-term average of 38.5%. It’s also slightly down from last week, which is a surprise to me. This is Neutral. 4) CBOE Equity Put-Call – Bullish The CBOE Equity-Put Call ratio is at 0.51, which is near 3-month lows. There is a whiff of panic buying here. The 3-day moving average of 0.62. This indicates higher-than-average bullishness. 5) ISE Sentiment – Neutral The ISE Sentiment Index was 119 (92 calls for every 100 puts) at yesterday’s close, which is a bullish reading. And the 10-day moving average is 84.9. Even though the 10-day moving average indicates higher recent demand for puts, I’ll call this neutral because that moving average has moved up quite a bit, and the 119 reading is the highest we’ve seen since early December. Conclusion Out of 5 sentiment indicators, we have 3 bullish, 2 neutral, and 0 bearish. As I said last week, the ISE Sentiment Index seems to always read bearish no matter what’s going on in the market. So that neutral indicator actually doesn’t count for much. So for 2 weeks in a row, traders seem very bullish. That doesn’t necessarily mean we’ve topped out, but there is some frothiness to the action. I would get really worried if the VIX spread expanded to 5, because that would mean traders are pricing in basically no volatility at all following a 15% run off the pre-election lows. For now, I urge you to remember that market trends often go way longer than may seem reasonable. Many traders try to use sentiment indicators as buy/sell signals, but that is a very dangerous game.
Continue Reading -->