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T3’s Take 3: Yellen Goes Hawk, Spikes the Dollar
1) Yellen Goes Full Hawk Today, Federal Reserve Chair Janet Yellen gave a speech at the Commonwealth Club in San Franscisco, and she swung her hawk hammer. Yellen said the Fed is close to meeting its dual mandate of full employment and price stability, and that Fed officials expect a few rate hikes this year. The US dollar immediately ripped on the news, gaining 1.7% against the yen and 0.7% against the euro. The dollar in strength put a hurting on gold, which fell -0.7%. The ever-volatile gold miners ETF(GDX) dropped -1.5%. 2) Stocks Bounce Yellen’s hawkiskhness drove a rebound in stocks, and the S&P 500 managed to squeeze up 0.2% to 2271.89. That’s not exactly exciting, but there were some signs of strength under the hood. The Russell 2000 rose 0.5%, and the Nasdaq Biotech ETF (IBB) rose 0.8%. Yellen’s hawk talk drove the S&P Financials ETF (XLF) up 0.8%, with Regional Banks (KRE) up 1.1%. Retail, energy, and US Treasuries led the decliners’ column today. After the close today, Netflix (NFLX) reported better-than-expected Q4 earnings and surged over $10. 3) Jeff Cooper on Gold This afternoon, T3 Live’s Jeff Cooper issued the following analysis of gold: Yesterday, GLD gapped up into a shelf of resistance from the spring of 2016 around 115. Today, after treading water in the early going, the bears came out to play. GLD is pulling back into the gap window from yesterday. GLD and the miners have done a lot of work and are entitled to inhale. However, GLD is doing something it hasn’t done for many moon: GLD has delivered a Golden Cross with the 50 week crossing above the 200. Click here to learn more about Jeff Cooper’s Daily Market Report.
Continue Reading -->Jeff Cooper’s Morning Call Express: Respect Your Stops
In today’s Morning Call Express, T3 Live’s Jeff Cooper breaks down the action in SPX and talks about the important of stops. Click here to learn more about Jeff Cooper’s Daily Market Report.
Continue Reading -->Ifan Wei Interview: From the Boxing Ring to the Trading Floor
To help you get to know T3 Live’s growing bench of trading talent, we’ve launched a series called “Meet the Traders” so you can get an inside look at how our team operates. Today, we are proud to introduce you to Ifan Wei, one of our moderators in the T3 Live Black Room. 1) Welcome Ifan! Tell us a little bit about yourself. I grew up in Texas. I attended the Haas School of Business at the University of California, Berkeley, where I boxed for 4 years. Upon graduation, I began my career in marketing in big tech and the NFL. So even before I became a trader, I had the privilege of exciting, fulfilling, and challenging opportunities. Trading is a progression of that. 2) What’s Tougher? Trading or Boxing? Progress came more naturally in boxing, but both have their challenges, both physically and mentally. 3) Do you think your boxing background has helped you as a trader? Yes, absolutely. I think training for any competitive event makes you stronger mentally and emotionally. And competing in sports emphasizes a cycle of practice and preparation to be highly functional in a stressful, dynamic arena. That can help any trader. 4) How did you first get involved with the markets? My dad has always kept an eye on the markets, but not as a very active participant. So while I was aware of its existence and daily fluctuations, I was not introduced to price charts until an accounting class case presentation. Comparing company 10/K’s and curiosity about the impact on a company’s stock price led me to charts. So, there wasn’t a seminal moment that turned me into a trader. I just progressively became more interested in reading charts. 5) How would you describe your trading methodology? I use a top-down approach to technical analysis in order to anticipate momentum. I speculate on momentum based on two strategies: broken support/resistance and climactics (parabolic exhaustion). My most common strategy is when support or resistance is broken overnight, producing a gap in price at the open. To time my entrie, I use variations on 2 basic repeating patterns: bases and retracements. 6) What is your day-to-day focus these days? My #1 focus each day are stocks that gap. While most stocks gap each day, I am looking for the outliers. Inside the universe of the 2,000 most liquid equities, I focus on the extreme gainers and decliners. Typically, I am looking for a pattern/entry in the direction of the momentum. Other times, I am looking for signs of parabolic acceleration into exhaustion. If that sets up, I will begin to look to play against the trend. 7) What is the 1 thing you wish you knew when you started as a trader? The importance of patience. I did not know what kind of trader I was when I started. While I was fortunate enough to get an education at the beginning of my trading career, I lacked the self-awareness and understanding to internalize and apply it. 8) Do you believe in setting specific stop loss and target prices? Yes. A stop loss is there for me to know when I should admit I’m wrong. If the trade sets up again, then I can always re-enter. My targets come from the concept of support and resistance areas, and I trail my stops when those areas are reached. 9) Are you concerned about high-frequency and algorithmic grading? Yes, but my risk management acknowledges that anything can happen at anytime. I don’t make any specific adjustments in my trading to account for them. 10) What is 1 thing traders can do today to start getting better results? Track your trades. If you already track your trade entries and exit, be sure to journal your thoughts throughout the trading day. Log your observations. You will pass on trades that work, and pass on trades that don’t work. These decisions can be just as enlightening as the trades that you take. 11) What book should every beginning trader read? I’ve read and reread the commonly cited classics like Reminisces of a Stock Operator, Trading in the Zone, and The Zurich Axioms. They’re great. But I think anything that provides self-reflection and introspection can help you become a better trader, even if it’s not a trading-specific text. Psychology/philosophy books like Thinking, Fast and Slow and The Tao of Jeet Kune Do can be just as enlightening for a trader. 12) Are there any traders you look up to? I admire Sami Abusaad, Mark Harila, and Kurt Capra, my co-moderators in the Black Room, as well as my previous mentors. I try to keep in touch with a number of other professional traders. Consistency is a quality that they all share, and they are key to longevity in this business. They vary in style and approach but are consistent day-in and day-out in their method. 13) What would you be doing if you weren’t a trader? I’d probably still be in sports marketing. I have friends working for the big agencies and teams who still love what they do. Click here to learn more about the T3 Live Black Room
Continue Reading -->4 Real-World Investing Lessons You Need to Know
After 13+ years of looking at the market on a daily basis, and flushing a whole bunch of cash down the drain on idiotic trades, I’ve grasped a few realities about how money moves in the real world — far away from the textbooks and theory pushed at your average business school. Here are 4 of them 1. What You Know, Everyone Else Probably Knows, Too. Investors have a tendency to overestimate the uniqueness of their ideas, even though we’re all drinking from the same information cup. Furthermore, the presence of social media outlets like Twitter (TWTR and Facebook (FB) have drastically accelerated the speed at which investable information is distributed. That means that with few exceptions, everything gets priced into the market pronto. So if you’re thinking of buying bank stocks because The Fed’s about to raise rates, or shorting Apple (AAPL) because of slowing revenue growth, slow down and take a deep breath. It’s important to understand the past and present. But to be a successful investor, you’ll have to predict the future — a far bigger challenge than skimming through 10-Ks and listening to earnings calls. In other words, focus on examining not where the fundamentals and newsflow are, but where they may be going. Remember, when a guy on TV tells you a stock is good because it’s trading at X times earnings and has Y in cash on its balance sheet, he’s simply repeating the bare minimum of what the market knows. As men wiser than me have said, “What the market knows is not worth knowing.” 2. Timing Is Everything. When looking at the market,it’s important to understand not only “the what,” but “the why.” But the more I think about it, the more I’d argue that “the when” trumps both those considerations. Let me tell you a story. I once interviewed at a hedge fund that was making a major bet on its prediction that the then-growing housing bubble would implode. Smart money, right? However, that interview took place in early 2003, right before the Housing Index (^HGX) doubled. Likewise, a lot of folks were short FitBit (FIT) year as it crashed and burned from that $51.90 high hit last August. But a lot of bears got smashed on the 73% rally that precded the drop. So when you have an investment thesis in your mind, ask yourself, “What makes now the right time to bet on this?” Furthermore, if the S&P 500 is skyrocketing, it is entirely likely that junky companies rally big-time. Likewise, if the market’s in meltdown mode, even the best of the best can get smashed. Apple (AAPL) closed out 2007 at $198.08. But in 2008, even in the face of enormous earnings beats and the halo of the iPhone’s unprecedented success, Apple finished the year at $85.35 — a drop of 57%! You may be smart, but remember: Sometimes Mr. Market just does not care about what you think. 3. You Are Probably Suffering From Confirmation Bias. The Oxford Dictionaries defines confirmation bias as “the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.” Translated into financial terms, it means that if you’re bullish on gold (GLD), you interpret everything you see as bullish for gold. I know the power of confirmation bias from a horrible experience with a former tech highflier called Rackable Systems, which changed its name to SGI (SGI) after it acquired Silicon Graphics in 2009. In 2006, Rackable Systems was a momentum King — kind of like newer names like Acacia (ACIA). It was pulling in boatloads of money selling energy-efficient servers to major data-center operators like Microsoft (MSFT), Amazon, and Yahoo (YHOO). And then — let me point out that I had complete knowledge of this — competitors like Hewlett-Packard (HPQ) decided they wanted some of those data-center dollars. Maybe I should have imagined what would happen if Rackable lost Microsoft (34% of revenues) or Yahoo (26% of revenues) as a customer, or at the very least, the margin pressures that could be introduced in a more competitive server environment. However, I viewed the new competition as nothing less but confirmation that Rackable was on the right track. And then Rackable crashed from $56 to under $10 as earnings collapsed. It is impossible to stay perfectly objective when performing research. But you can stay one step ahead of your own bias by regularly asking the question, “Am I just telling myself what I want to hear?” 4. In Isolation, Valuation Ratios Are Useless. Investors often take a simplistic view of valuation ratios, automatically assuming that if something is “cheap,” it’s good, and if it’s “expensive,” it’s bad. But you’ll often see cheap stocks get cheaper and expensive stocks get more expensive. How many times has someone told you that Salesforce.com (CRM) is overpriced? Next, look at the stocks’ chart since it went public: A P/E ratio, like every other valuation ratio, is 100% meaningless in isolation. It is far more important to examine how the “E” part of the equation is changing. (Or sales for EV/S ratios or EBITDA for EV/EBITDA ratios, etc.) A company trading at five times earnings can look awfully expensive following a bad quarter that destroys future earnings expectations. That’s how a stock like GoPro (GPRO) can go from $98 to $50 to $9 in the blink of an eye. It also works the other way around — a high-priced momentum stock can suddenly look cheap if earnings come in ahead of expectations and forward estimates rise.
Continue Reading -->Scott Redler: 4 Life Lessons to Get You Through the Bad Times
One year ago today, I was laying on my belly, staring at the floor… and wondering if I’d ever walk again. But let’s rewind the story a bit. I’ve been a competitive racer since I was 30, finishing over 50 triathlons and marathons, including two Ironman events. I’ve also coached runners and raised money for the Steven M. Perez foundation, the Leukemia & Lymphoma Society, the American Cancer Society, and the R. Baby Foundation. I keep all the mementos in my man cave: Steven Perez was my best friend since we were roommates at SUNY Albany. In 2007, he was diagnosed with Chronic Myelogenous Leukemia. Steven’s doctors did all they could to treat him, and our circle of family and friends pitched in to help. But after 6 weeks fighting the toughest battle on Earth, Steven passed away. I was horribly depressed, and only one thing seemed to help: exercise. So to raise money for The Leukemia & Lymphoma Society and the newly-formed Steven M. Perez Foundation, I completed my first Ironman triathlon. That’s when I really became a serious endurance athlete. I’d been racing for years, but finishing an Ironman was a whole new level for me. Unfortunately, my success came with a price. Years of serious training and racing took a big toll on my body. I had a lot of wear & tear, and I never really recovered from it. And throughout 2015, it was obvious that something was very wrong with me. My left leg was atrophying, and it would go numb if I stood for too long. My back was killing me. I had a hard time getting out of my chair, and I was barely sleeping. And I looked horrible. I was pale and losing weight, and I was shorter because of my shrinking leg. At Thanksgiving, a doctor friend was pumping me with injections just so I could stand up to cook! I spent 3 months in physical therapy, but deep down, I knew it was nothing more than a band-aid. I was wasting my time because I was afraid to face the music. But I couldn’t take any more of those scared looks from my wife and son. Even our dog Cadence knew something was wrong! So I finally came to my senses and just gave up. I visited Dr. Mitchell Reiter, a New Jersey-based orthopedic surgeon and spine specialist. Dr. Reiter diagnosed me with a sequestered spinal disc, which was putting tremendous pressure on my spinal canal. I was quickly scheduled for a Laminectomy operation to fix the problem. And that’s how I found myself laying on my belly, staring at the floor… and wondering if I’d ever walk again. Now, I’ll admit I was being a little melodramatic. Laminectomies have a pretty high success rate. And I trusted my doctor. But when times are tough, it’s hard to stop thinking about every little thing that can go wrong. The surgery was a success, and I began my recovery. It wasn’t easy. I could barely get up for days. My wife was carrying me around the house! And my friends moved the Christmas tree up to my bedroom so I could see it without going on a never-ending journey to the living room. I took 2 weeks off work. I never had that much time off before, and being away from my trading screens made me stir crazy. By the time I returned to work, I was 20 pounds lighter and my face was the color of skim milk. My own videographer didn’t recognize me, even though we’d been working together every day for over a year! But as much as my body changed, my mind changed even more. I began appreciating the little things. Forget the Ironman — suddenly, just getting through a stretching session was a big deal! Being pain free felt better than any medal I ever won! And I may never do another triathlon again. But you know what? I just ran alongside my son Chace as he finished his first 5K! He took home the gold, and I’ll never forget crossing the finish line with him. There are 4 simple, but valuable lessons to be learned here: 1) The Darkest Hour Is Just Before the Dawn Those last few moments before my surgery were some of the darkest I’ve ever been through. And you know what? That was the bottom. Things only got better. 2) Your Goals Should Change When Life Throws You Curveballs I used to think I’d be a high-level competitive racer forever. That may no longer be realistic, and I’m okay with that. I love coaching, and I’m more than happy to run smaller races until I get a better idea of my long-term prognosis. I don’t have to be “elite,” whatever that means. I just want to be the best I can be. 3) You Probably Have More Support Than You Think My family stepped up for me in ways you can’t imagine: That’s Celena, Chace, and our dog Cadence. I would not have made it back without all three of them! My parents were great too, always checking up on me to make sure I was doing okay. Aren’t they cool? And it feels silly now, but I was really worried subscribers would be ticked off while I was gone! But you were awesome — I received hundreds of supportive Tweets and emails, many of which included your personal stories of dealing with your own health problems. And not a single Redler All-Access subscriber cancelled due to my absence! That showed me that we are all part of a powerful global community. Here are some of our friends from Ukraine: (I’m in the front with the pink socks!) So just reach out when you need a hand. Odds are, people will there to help, and they’ll be happy to do so. 4) It’s Okay to Want to Give Up… Just Don’t We all go through rough times. Some have it worse than others, but we all have our own
Continue Reading -->Meet the Traders: 11 Questions with Mark Harila
To help you get to know T3 Live’s growing bench of trading talent, we’ve launched a new series called “Meet the Traders” so you can get a direct introduction to our team. Today, we’d like you to meet Mark Harila, who is a moderator for the T3 Live Black Room on our Virtual Trading Floor®. Thank you for joining us Mark! 1) Tell Us a Little About Yourself Mark. The hardest question I have to answer these days is “so what do you do?” My wife and I own 9 small businesses. Yes, 9. But I identify as a trader because that’s what first comes to mind when people ask what I do. Before I entered the trading world, I worked on over 30 installations across all branches of the US military. I enjoy traveling, and I love spending time with anyone who can handle a few quips and a little sarcasm. 2) How did you first get involved with the markets? I have been interested in the market for as long as I can remember. When I was in high school, my economics teacher held an investing contest and the winner was guaranteed an A for the semester. This piqued my interest doubly: a chance to get an easy A and learn how to make money? It turns out that even then I was a trader, not an investor. Every day I ran to the paper to see how my stock picks did and figure out what to buy or sell next. Between my competitive nature, a ton of reading, and lots of trial and error (so much for an “easy A”), I got an A in the class. But more importantly, I stoked a lifelong love affair with the markets 3) How would you describe your trading methodology? I am a technical analyst and trader. Many people believe technical analysis is about learning patterns. The truth isn’t that simple. Technical analysis is about understanding the psychology and emotions of market participants. If you can understand others traders’ emotions, expectations, hopes, and fears, then you will have a greater understanding of price movement. I tend to look for multiple elements converging in an area, with a compelling reason or impetus (such as a gap, void, pattern matching the market bias. etc) to find high quality patterns that are most likely to move in my direction. 4) You’ve said that when you started trading, you focused on learning on only one pattern at a time. Is this something you recommend to all new traders? YES! In T3 Technical Strategies, we teach a number of patterns but not every pattern is for every trader. When I started with our system, I spent weeks trading only one pattern until I knew it inside and out. I thought I was learning which setups worked beest, what time frames I should trade, which amplifiers were more likely to help, etc. But what I was really learning was my own psychology, preferences, and most importantly, my weaknesses. And believe me, there were more than I expected. The bottom line is, in order to be successful, you need to know yourself first. And by focusing on mastering each concept in isolation, you’ll essentially create a customized methodology that works best for your personality. 5) What is your day-to-day focus these days? My focus is on everything and nothing. It changes based on the time of day and the opportunities that present themselves. In the morning I focus on gaps, especially those that create huge emotional reactions in traders, like euphoria or pain. Later in the day I focus on my universe of about 900 stocks that meet my daily volume, ATR (average true range), and price requirements. I keep all 900 on 15-minute thumbnail charts sorted by sector. At lunch, I scan the entire universe in search of my afternoon trades. 6) What is the 1 thing you wish you knew when you started as a trade? I can’t say this enough: Novice traders look for ALL the reasons TO take a trade. Professional traders look for ALL the reasons NOT TO take a trade. My job as a trader is to find everything wrong with a trade and all the reasons it might fail. Then and only then can I take a trade in accordance with my plan. 7) Do you have a certain risk management strategy for cutting losses? Every trade I take has a clearly defined Stop Loss, Entry Price, and Target. I wrote Stop Loss first because it’s the most important, and because adhering to stops is non-negotiable. The stop is predicated on a chart area that if violated, represents a significant change in the trade. At that point, I no longer want to be in that trade. I risk the same amount of money on each trade, and the number of shares I take is predicated on the entry and the stop. In other words, my entire trading plan is a risk management strategy to cut losses, and Losses are an inevitable part of trading. They are even acceptable when viewed as a cost of business — I consider losses to be an education expense. 8) Are you concerned about high-frequency and algorithmic grading? There is no question in my mind that HFT’s and Algos can affect trading. But, I am not concerned about them. In fact if you know what to look for, they can give you a number of opportunities. 9) What is 1 thing traders can do today to start getting better results? I’m going to give you 3. First and foremost create a written plan. Trading without a plan is like cooking without a recipe. It can be done but you can expect mixed results. Plus, it’s nearly impossible to replicate your successes you don’t know how you got them. Second, track your trading activity, and don’t limit yourself to your P&L. You should be noting which setups you use, trade management tactics, what happened after you got out, and whether the trade met your plan. If you are not tracking
Continue Reading -->The Morning Hammer: Another Record High
The SPX finally squeezed through to make a post-election all-time high yesterday to catch up with the Dow, Nasdaq, and Russell 2000. And with futures in modestly positive territory, we very well could see another record at the open. The VIX is now down to 12.43, and as I’ve said, it could drop under 12. Check out the chart below — it’s getting down towards yearly lows. Commodities are up in the early going, with crude oil posting modest gains and gold up 0.6%. The volatile gold miners (GDX) are indicated up nearly 1%. Copper’s also in good shape. Nigeria expressed optimism about a possible OPEC deal announcement at the November 30 meeting. But overall, it’s hard to make heads and tails of everything because it’s a holiday shortened weak. Markets appear stretched technically but sentiment is only modestly bullish, which typically isn’t a good recipe for excitement. In fact, bears are probably still unwinding all the bearish bets they made ahead of the US Presidential election. Speaking of politics, news reports indicate that the Trans-Pacific Partnership has almost no chance of working since President-elect Trump vowed to withdraw. Trump said would look to make bilaterally negotiated trade deals, and end some restrictions on shale oil and coal production. For now, things are looking pretty slow. I’ve got close eyes on gold and the miners. Gold’s been destroyed since the election, but it’s getting a strong bounce off $1200, which could mean a double bottom. Biotech is indicated up pre-market. That’s a good sign. It ripped on the Trump victory, then stumbled a bit. If it makes a power move higher, that could signal continued momentum in the major indices. Good luck out there!
Continue Reading -->Chef Scott Redler Shares His Secret Turkey Recipe
Family + friends + food + football + fitness (say that 10 times quick!) makes Thanksgiving one of my favorite holidays. Last year, I published my special Thanksgiving turkey recipe, but it got lost in our transition to a new tech platform. My team managed to dig it up, so we’re putting it out again for you just in time to go food shopping. I cook like I trade, and I trade like I cook. I keep things simple, and I go with what works. I’ve been using this recipe since my parents moved to Florida 10 years ago, and it’s what I’ll be serving them this Thursday afternoon. Ingredients List Turkey 3-4 long celery sticks 2 sticks of butter 2 oranges 3-4 lemons 4 whole onions 3 big hunks of garlic Salt Pepper Paprika Ms. Dash seasoning 1 can of pineapples 1 jar of orange or apricot jam The quantity of ingredients depends on the size of your turkey. Just scale up or down as you see fit. We usually get a frozen 20-pounder. And oh yeah — make sure you have a quality knife! It will make your life a lot easier. This Victorinox is a good one. I’ll take the bird out of the freezer Monday morning so it will be defrosted by Wednesday evening when I do my prep work. You know me. Whether I’m trading, running, or cooking, I never show up for battle unprepared. If you prepare properly the day before Thanksgiving, you’ll get better results with less stress on Thanksgiving… just like in trading! I’ll dice up 4 whole onions and 3 big hunks of garlic, and toss them in a large bowl. I then add salt, pepper, paprika, some Mrs. Dash seasoning, and mix it all up. Then, I’ll stuff it into the turkey. I’ll also put half a can of pineapples in there, and jam a stick of butter right in the middle of all. Then, I pour some orange juice and lemon juice over the turkey skin — just enough to get it wet. In a separate bowl, I’ll mix up more salt, pepper, and paprika for the skin. I spread it all over, making sure to get in all the nooks and crevices. Don’t be cheap! Then, I’ll wrap the turkey in a big bag and leave it in the refrigerator overnight. On Thanksgiving morning, I’ll cut a few long celery sticks in half and put them on the bottom of the pan. Then, I take the turkey out of the bag and place it on the pan. There will be a lot of juice in the bag. Transfer it to the bottom of the pan, and be careful not to spill any. It’s a real pain to clean up! Then I’ll mix up more salt, pepper, and paprika, and sprinkle it on top of the turkey. Now it’s time to stick the bird in the oven. After an hour, start basting it every 15-20 minutes. Take juices from the cavity and squeeze it on top of the turkey. Also, rotate the pan every hour or so. It should take about 4 hours to cook. Just follow what your meat thermometer says. When there is about 20 minutes to go, pour a jar of orange or apricot jam in a bowl, and add a softened stick of butter to it. Mix it together, and brush the turkey with it. Stick the turkey back in, but keep a close eye on it. We want a nice crispy skin, but we don’t want to burn it. Once the turkey’s done, take it out and let it sit for an hour before you carve it. By the way, if you’re not experienced in the art of carving up a turkey, here’s a good video that will help you get it right. Delay your carving as long as you can — turkey tastes best just when it’s cut! If you give this recipe a shot, take a picture, post it on Twitter, and tag me (@reddogT3) so I can see it! Have a great week, and an even better Thanksgiving!
Continue Reading -->Trump Made Traders Like the Market Again
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side provides evidence for their views. So I like regularly run through a wide variety of sentiment measures to get an accurate reflection of the market’s mood. According to 5 sentiment measures I track, traders hated the market ahead of the November 8 US Presidential election. As you’ll see, that’s clearly changed. Let’s Dive In: 1) AAII Sentiment – Bullish The latest AAII Sentiment Survey shows that 46.7% of individual investors are bullish, which is well above the long-term average of 38.5%. This is the highest level seen since February 2015. 2) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 62. F&G operates on a 1-100 scale, and 50 is neutral. This 62 reading indicates moderate bullishness. 3) VIX Spread – Bullish The 3-month VIX spread is at +4.69, which indicates traders are pricing in very low near-term volatility. This means traders are bullish. 4) CBOE Equity Put-Call – Neutral The CBOE Equity-Put Call ratio is at 0.65, with a 3-day moving average of 0.62. This indicates slightly higher-than-average bullishness, but nothing extreme, so I’ll leave it in the neutral category. 5) ISE Sentiment – Bearish The ISE Sentiment Index is at just 79 (79 calls for every 100 puts) this morning — which is a bearish reading. And the 10-day moving average is 82.9. That also indicates bearish sentiment. ******* Pre-election, 5 of 5 sentiment indicators were reading bearish. Now we have 3 bullish indicators, 1 neutral, and 1 bearish. So Trump not only changed the minds of a lot of voters, he’s changed traders too. And if the S&P 500 makes new all-time highs again, we could easily see the bulls go 5 for 5 in our next sentiment check.
Continue Reading -->14.4% of Traders Say Trump Slays the Bull
Over the weekend, we sent a survey to the T3 Live community to get their thoughts on pressing market issues like the Fed, gold, and what they think could take this market down. If you’d like to participate in our next trader survey, sign up for this week’s forex webinar via this link: https://t3campaigns.clickfunnels.com/optin10668137 Before I get started, let me point out the obvious: these survey results only represent a portion of the T3 Live trading community — NOT traders or investors as a whole. Still, I think you’ll find them interesting… especially when it comes to what traders think will destroy the bull market. So let’s go through our questions one by one: 1 ) The S&P 500 closed at 2164 on Friday. Will it make a new all-time high above 2193 before 2017? 81.3% of survey participants said the S&P will make new all-time highs before year-end. This was a pretty big surprise to me, given that broader market sentiment is fairly bearish. Then again, we’re less than 2% from a new record above 2193. 2) Gold fell 3.3% to $1225 on Friday. What will it hit first – $1200 or $1250? 58.7% said that Gold would hit $1,200 first, and so far they’re right. Gold is ticking lower today, and the downtrend isn’t showing signs of stopping. 3) Will the Fed raise interest rates in December? 74.3% of surveyed traders believe the Fed will hike in December. The CME’s FedWatch Tool currently shows an 85.8% probability of a December rate hike. That’s not terribly far off. 4) Are traders too bullish or too bearish right now? 34.3% of respondents believe traders are too bullish. 19.3% believe traders are too bearish. And 46.4% think trader sentiment is just about right. Next time around, I’ll simplify this with just two choices — too bullish or too bearish. 5) Which sectors will perform best into year-end? The banks and biotechs have been ripping since Donald Trump’s US Presidental election victory, and our survey indicates that traders expect more of the same. A whopping 51.4% believe financials will lead into-year end. In second place was health care & biotechnology at 26.1%. Technology has been lagging, and just 5.8% of traders think it will lead into year-end. 6) Which area of the market will perform worst into year-end? On the flip side, traders expect bonds to lead the decliners’ column. 31.2% of respondents said bonds will perform worst into year-end with gold in second place at 16.7% 7) What single factor is most likely to break the bull market? Please be as detailed as you’d like. This question was an open-ended question designed to determine whether traders believe Donald Trump will disrupt the bull market. I wanted to see how many traders would offer up Trump without being prompted first. 14.4% of traders cited Trump as the single factor most likely to break the bull market. Meanwhile 15.6% of traders believe the Fed or monetary policy will be the culprit. 13.3% cited terror attacks or other negative geopolitical events. Here are some of the more interesting responses to this question: (I made minor edits for clarity) “The alt right and rising nationalism around the world.” “Too much too fast based on nothing new. The market is overbought and tech is selling off based on assumptions that Trump will go after them. If they really think he will and put taxes on imports, the companies will get ready for bad times which result in high unemployment.” “Interest rates going too high too fast because President-elect Trump has huge fiscal package that will require massive debt via bonds.” “Negative world event such as significant terror attack on or around inauguration.” “Debt will be a big drag on companies bottom line and government debt is unsustainable. So governments and Central Banks should continue to print and go nuclear on interest rates to try and finance that debt. Banks will then put that money to work by sticking most of it in the stock markets. There will be a big tug of war between inflation and deflation over the next couple years. Want to participate in our next trader survey? If so, sign up for this week’s forex webinar via this link: https://t3campaigns.clickfunnels.com/optin10668137 We’ll add you to the list!
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