Category Archives for Articles
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!
Continue Reading -->Bears Scream After the Donald Trump Bump
The ISE Sentiment Index is one of my favorite sentiment measures. It is a call-put ratio (as opposed to a put-call ratio) that uses opening long customer options transactions to judge sentiment. It excludes trades like short puts (which are bullish positions) and trades from market makers and firms, which to me makes it more useful than straight put-call ratios. As of yesterday’s close, the ISE’s 10 day moving average was just 67. That is an all-time low, and it’s likely to go even lower tomorrow. As of 10:30 a.m. ET, the ISE was at just 44. If it closes at 44, the 10-day moving average will be down to 66. Over time, the ISE has fallen as equity options have increased in popularity as a hedging instrument, even for credit investors looking for protection in illiquid assets like high-yield bonds. But still, this is a pretty depressed reading. It’s lower than readings seen at the August 24, 2015 mini-crash. And prior to this 10-day stretch, the ISE averaged 87 this year. And the 10-day moving average bottomed at 76 during the February mess. In my experience, when you have technically stretched markets and bearish sentiment, we tend to see a stalemate. That said, other sentiment indicators I follow like the CNN Fear/Greed Index and AAII Sentiment paint a slightly different picture. But after the 2-day Trump bump, it’s safe to say fear is setting in again. Check out this chart of the S&P 500 against the ISE Sentiment Index: As you can see, when the ISE gets to these depressed levels, the market tends to bounce. However, we’re in uncharted waters from a political standpoint, and it still feels like we’re in an “anything goes” environment.
Continue Reading -->The Morning Hammer: The Trump Bump Continues!
The State of the Markets, Straight from Scott Redler Download Scott’s FREE presentation now by clicking this link: https://t3campaigns.clickfunnels.com/optin10692005 Yesterday, markets staged a big rally following an overnight session that was so bad that SPX futures went limit down. Traders were disappointed with Donald Trump’s historic victory over Hillary Clinton, The Trump Bump continues this morning, with SPX and NDX futures well into positive territory, and the Euro Stoxx 50 up 1.1%. One big story in the news today is that following the Brexit and Donald Trump’s US Presidential election victory, we could see even more major political upheavals. Now many folks think that Marine Le Pen, leader of France’s far-right National Front party, could become President of that nation next year. And Italy has a major reform referendum vote coming up on December 4 aimed at limiting the powers of regional governments in order to streamline legislation. But that could get rejected since Italian PM Renzi supported Hillary Clinton, which does not fit with the growing wave of global populism. All across the globel, the establishment is becoming less established. Maybe THAT is the big trading/investing theme we need to focus on. We could even look at Germany. PM Merkel has been considering running for a 4th term. Polls have indicated that about half of Germans oppose that. If she does run, I suspect she would get destroyed. The tide is just too strong. Anyway… The VIX is still falling and is under 14 this morning. So all those put buyers that were scrambling to buy election protection are getting decimated once again. The ISE Sentiment Index was just 68 yesterday even with the rally, pushing the 10 day moving average down to 67.4. That implies very, very negative sentiment. The 10 day moving average of the CBOE equity put call is 0.735, which is slightly above the YTD average. So we have a lot of hedges that probably need to be unwound, and that could propel the S&P 500 to record highs. Good luck out there!
Continue Reading -->The Morning Hammer: Trump Wins, Trump Wins
Want to Join the Exciting, Lucrative World of Prop Trading? Join Amber Capra for our next special information session: https://t3campaigns.clickfunnels.com/optin10627329 May you live in interesting times… -English expression of what may be a Chinese curse I’ve been saying that we couldn’t count out Donald Trump until the final vote was tallied, and lo and behold, he pulled it off. If you’re interested in learning why Trump won, I recommend watching this video — there is a good case to be made that Trump’s persuasion skills put him over the top. But let’s focus on the market. First things first… what’s going on with the Mexican Peso? Well, it’s down -9% — making a far bigger move than it did on the Brexit. The iShares Mexico ETF (EWW) is down -11%. The Euro Stoxx 50 is down -1.9%. The yen is up 1.7% vs. USD. The Nikkei is down -5.4%. SPX futures are down -2.1% with NDX futures off -2.4%. Meanwhile, biotech is flying! IBB is up a quick $15. Clinton has been critical of drug company pricing practices, and Trump’s victory means the pressure is off. It was pricing in a $10 move, so that’s a pretty spectacular rally. The VIX is up 7.3%. Gold is up 2.4%. You get the point… The big question now is whether this is a repeat of the Brexit action, meaning a massive volatility spike that looks like blip on the radar in a few months. I suspect we’re going to see a very interesting open. A lot of individual investors may look to dump quickly, and odds are we’re going to see a huge put option demand. I’d watch the ISE Sentiment Index. The first reading will be out at 10:10 a.m. ET. The 10 day moving average was at 72 (72 calls for every 100 puts), which is actually lower than what we saw at the February lows. I suspect we’ll get a sub-30 open, good enough to push the 10 dma under 70, which means serious, serious bearishness. Good luck out there.
Continue Reading -->The Morning Hammer: Happy Election Day?
How to Thrive in the Future of Trading Want to go Quant without a PhD? Check out our latest live event here: https://t3campaigns.clickfunnels.com/optin10626572 I’d say Happy Election Day but there’s doesn’t seem to be much happiness out there today. So I added a question mark. If there’s one sign of the times… it’s the lack of signs. I’ve lived in Brooklyn, NY my whole life, and every election, I’ve seen tons of signs for Presidential candidates in front of people’s homes. This time around… nada. Anecdotes aren’t evidence, but I think this says something about the state of affairs. It seems like the market wants Hillary Clinton to win to avoid the Trump wild card. I guess folks will decide the ramifications of a Clinton Presidency after the fact. However, what’s most important is resolution. The market wants a clean Clinton victory without Trump disputing the results and extending the spectacle. That said, I wouldn’t count Donald out until the final vote is tallied. Reuters is saying it sees a 90% chance of Clinton winning. But Trump was never supposed to even be in this race. Yet here he is at the homestretch. The Brexit was not supposed to happen. Yet it did. Futures are down slightly this morning, which feels like run-of-the-mill profit-taking after yesterday’s big surge. One interesting story I caught yesterday was Reuters’ report of Wall Street banks prepping for Brexit-like turmoil tomorrow. That may reduce the chances of a massively negative reaction to a Trump win or a sell-the-news reaction to a Clinton victory. In recent years, investors have generally overhedged, in the process throwing away untold billions of dollars on put options. Look at the chart below of the ISE Sentiment Index since inception in 2002.: As you can see, it’s slowly drifted lower, which means that put option demand has grown relative to call option demand. We’ll soon see if the recent spate of put buying was just another big waste of investor cash. Good luck out there.
Continue Reading -->Trader Mailbag: What’s the Deal with PHK?
Hi Mike, You have been in PHK for a long time. What is the reason for the heavy selling? -Tom Hi Tom, Thank you for the question. Indeed, I have been in the PIMCO High-Income Fund (PHK) for a long time and it has been clobbered, dropping from a peak of $10.15 in August to $8.55 today. PHK is a closed-end high-yield bond fund that uses leverage to juice its returns. Closed-end funds are significantly more volatile than plain-vanilla ETF’s and mutual funds. And PHK has been trading at a giant premium to net asset value (NAV). So with the high-yield market coming under pressure on the decline in oil prices and pre-election jitters, PHK has gotten slammed, with that premium to NAV closing hard. As I’ve discussed before, I only like buying volatile closed-end funds like PHK on extreme down days. Why? Because they get absolutely destroyed, creating attractive buying opportunities. As far as my long-term strategy with PHK goes, it’s a buy and hold position for me, and I just leave it alone with dividends reinvesting. That helps cushion me against the short-term volatility, which can be pretty extreme. I’d only consider another outright buy on a dip below $8.
Continue Reading -->Protected: Scott Redler’s Pre-Election Market Breakdown
There is no excerpt because this is a protected post.
Continue Reading -->