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T3’s Take 3: Do You Feel the Heat Around the Corner?
“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)
Continue Reading -->Webinar Replay: Why You Shouldn’t Fear Forex
In this special live webinar, T3 Live Forex Trading Strategist Kurt Capra gives an in-depth introduction to forex trading.
Continue Reading -->Scott Redler’s Chart Attack: SPY, BABA, GDX
SPY has been choppy but the range is intact. Support is $217.35, then $216.25. Resistance is $218.67, then $219.60ish. Take things slow and don’t overtrade. BABA has digested a nice targeted earnings move for a few weeks. Holding $95.45 would help it get above $96.68 on the way to $99+. GDX already broke the 8/21 day and didn’t respect the 50 that was already lost. Use $25.66 as your pivot. This can see $23-24 on a strong jobs report. Positions disclosure: Scott Redler is long BABA, BABA calls
Continue Reading -->The Morning Hammer: More of the Same Yawns…
Crude oil is dipping below $46 on the American Petroleum Institute’s inventory report, which said US crude stocks rose 942K barrels last week. Remember, we get EIA data today at 10:30 a.m. ET. Traders are looking for a 1300K build. It should be interesting. Two weeks ago, we saw a massive beat, but last week was a huge miss. We’ve also got the ADP Employment Change, Chicago PMI, and Pending Home Sales on the calendar, but folks are really waiting for Friday’s big jobs report. SPX futures are flat, which shouldn’t be a surprise to anyone given the past 2 months of basically no volatility. The dollar is up as the hawk trade is still raging, though gold is down only fractionally. The miners got destroyed yesterday and I’m curious to see if there are any dip buyers there. In deal news, cloud software name Interactive Intelligence (ININ) is being acquired by Genesys for $60.50 a share, or $1.4 billion. ININ had been rumored to be exploring a sale. Overnight, European markets are mostly positive. EU inflation beat expectations in August, which extends the streak of better-than-expected post-Brexit economic data. German and Italian unemployment, and UK house prices were also solid. Irish airline Ryanair warned that it may reduce earnings guidance if ticket prices continue to drop. Looking out today, crude oil is obviously important, but I’m closely watching biotech. The major indices are holding up well, but IBB has been deteriorating over the past week or so, implying profit taking. I’d also watch the hot new issues like Acacia (ACIA), Twilio (TWLO), and Line Corp (LN). They’re all over the place as a group, but if they start declining in concert, that could be a sign of trouble. But for now, the bull is holding things together pretty well. Maybe Friday’s jobs report will be a catalyst for volatility, but that feels like wishful thinking after a horribly boring August.
Continue Reading -->T3’s Take 3: The Big Hawk Is Still Flying!
1) The Hawk Trade Rages on Today, Fed Vice Chairman Stanley Fischer said he believes that productivity growth will rebound, keeping traders confident that the Fed will raise rates again this year. This helped boost the popular long dollar/short gold trade. The dollar rose by 1.1% against the yen and 0.4% against the euro, while gold fell -2.0%. The junior gold miners ETF (GDXJ), which has more than doubled this year, took the brunt of the damage today with a -4.9 decline. 2) Shifty Markets Aside from the ugliness in gold, stocks remain range-bound as traders await the return of volatility. The S&P 500 fell -0.2% to 2176.12, making today the 37th straight trading day without a 1% move in the S&P 500. Market volatility is as low as it’s been since November 2014. Banks were strong courtesy of the hawkish Fed talk and prospect of rising rates, while utilities and retailers were weak. The important biotech sector was down, but no major damage was done. 3) Apple Stung on Tax Beef Today, the European Commission found that Ireland gave Apple (AAPL) an illegal “selective tax treatment.” Apple has been ordered to repay 13 billion euros ($14.5 billion) plus interest, though Ireland will appeal the ruling. Apple traded as low as $103.50 in premarket trading, and it finished at $106.00, down -0.8%. The verdict also impacted the shares of other tech names that use Ireland as a tax haven, namely Google (GOOGL) and Facebook (FB). Wednesday’s Trading Calendar US Economics (Time Zone: EDT) 03:15 Fed’s Rosengren to Address Financial Conference in Beijing 03:15 Fed’s Evans Speaks on Economy and Policy in Beijing 07:00 MBA Mortgage Applications (Aug 26): -2.10% 08:00 Fed’s Kashkari Speaks on Fed Structure in St. Paul 08:15 ADP Employment Change (Aug): exp. 175k, prior 179k 09:45 Chicago Purchasing Manager (Aug): exp. 54, prior 55.8 10:00 Pending Home Sales MoM (Jul): exp. 0.70%, prior 0.20% 10:00 Pending Home Sales NSA YoY (Jul): exp. 2.20%, prior 0.30% 10:30 DOE U.S. Crude Oil Inventories (8/26): exp. 1300k, prior 2501k 10:30 DOE Cushing OK Crude Inventory (8/26): exp. 400k, prior 375k 10:30 DOE U.S. Gasoline Inventories (8/26): exp. -1000k, prior 36k 10:30 DOE U.S. Distillate Inventory (8/26): exp. -125k, prior 122k 10:30 DOE U.S. Refinery Utilization (8/26): exp. -0.50%, prior -1.00% 10:30 DOE Crude Oil Implied Demand (8/26): prior 16833 10:30 DOE Gasoline Implied Demand (8/26): prior 10113.4 10:30 DOE Distillate Implied Demand (8/26): prior 5055.6 Global Economics 02:00 EUR German Retail Sales m/m 03:55 EUR German Unemployment Change 05:00 EUR CPI Flash Estimate 08:30 CAD GDP m/m 21:00 CNY Manufacturing PMI 21:30 AUD Private Capital Expenditures 21:30 AUD Retail Sales 21:45 CNY Caixin Manufacturing PMI Earnings Before Open: None of significance After Close: Five Below (FIVE) Salesforce.com (CRM)
Continue Reading -->The Apple Bounce, and 4 Other Things I’m Watching
1) Apple Bounces Apple (AAPL) is down but well off its morning low, which was driven by the EU tax ruling. The final verdict is unknown, but even in the worst case scenario, Apple may not feel a thing from a financial standpoint. The real significance, however, is seen in other tech names who have Ireland tax exposure: Facebook (FB) and Google (GOOGL) are off today. But for now this seems more like an excuse to take profits rather than an end-of-world scenario. An excuse may be enough though… 2) Crude Oil Crude oil is pretty weak today ahead of inventory numbers from the API (reported after the close today) and the EIA (tomorrow morning). Iraq will support an output freeze at next month’s OPEC meeting in Algeria, according to Prime Minister Abadi. However, what OPEC actually will do remains a mystery. A lot of traders got stung by OPEC’s failure to freeze production in June, and some folks are justifiably afraid of a repeat. 3) Biotech Biotech (IBB) is pretty listless today. I regularly harp on biotech’s importance to any serious bull move, but it does feel like it’s getting worn out. Check out the chart — IBB lost the 20 day and the 50 is coming up fast. 4) The Hawk Trade The big hawk trade is still going as Fed rate hike expectations have increased quite a bitver the past month. Gold is getting roughed up and the dollar’s in full rip mode. Active stock traders should be watching the Regional Banks ETF (KRE). It’s not nearly as followed as XLF, but it moves a heck of a lot more. 5) Dove Soup And on the flip side, the dove trades (utilities, Treasuries, housing) are coming under pressure. Like Jeff Cooper, I’m closely watching the junior gold miners (GDXJ). They’re still up 131% YTD, so if gold keeps flopping, the miners have an awful lot of room to drop. However, just be aware that these trades really can go anywhere. At the Brexit, traders were pricing in basically zero chance of a rate hike. Now they see 60% odds. Any big shifts in the broader markets or economic data could shake things up.
Continue Reading -->The Morning Hammer: Apple Slammed on Tax Ruling
Don’t Fear Forex… Attend Kurt forex’ free webinar today after the close and learn why so many stock and options traders are embracing the lucrative world of forex. ******* Shares of Apple (AAPL) are getting slammed this morning after the European Commission found that Ireland gave the iPhone maker an illegal “selective tax treatment. Apple has been ordered to repay 13 billion euros ($14.5 billion) plus interest, though Ireland will appeal the ruling. The stock traded as low as $103.50 in the early going but it’s come back a bit. Apple has well over $200 billion in cash so it won’t have any problem fitting the bill. The real issue is whether investors will start worry about the tech sector’s ability to cut taxes by using Ireland-based entities. NDX futures are down -0.2%, so it seems that no one really cares for now. But keep an eye out on this issue. Overseas markets are mostly in the green today, led by the banks, even with negative economic data. Euro-area economic confidence, UK mortgage approvals, and Adzuna advertised salaries were all weak. UK economic data has generally been solid post-Brexit, so these numbers are bucking the trend. Check out this of the Citi UK Economic Surprise Index (starts on 6/1/2016): The dollar is up and gold is down on increased confidence that the Fed is ready to move. The gold miners (GDX) look especially weak this morning. The news flow is pretty slow and the economic calendar is light, with just S&P CoreLogic home price and consumer confidence numbers on tap. Fed Vice Chairman Fischer appeared on Bloomberg TV this morning, expressing optimism that productivity growth will rebound. He also said that incoming economic data will determine the trajectory of interest rate increases. So for now, it looks like we’re back to the range, which makes sense ahead of Friday’s big jobs report. Maybe that will give traders an excuse to start taking real action? One can dream… P.S. Don’t forget to sign up for our FREE forex training session!
Continue Reading -->T3’s Take 3: Banks Lead the Way
1) Banks Rock Following FOMC Chair Janet Yellen’s hawkish-leaning speech in Jackson Hole on Friday, traders are increasingly certain that the Fed will raise interest rates this year. That sent up bank stocks, which benefit from higher rates, up big today. The S&P Financials ETF (XLF) rose 0.9% to $24.32, led by solid gains in Wells Fargo (WFC) and JP Morgan (JPM). The strong bank action pushed the market well into positive territory, more than making up for Friday’s small dip. The S&P 500 rose 0.5% to 2180.38. The Nasdaq underperformed due weakness in biotechnology and its smaller exposure to financials. 2) Why the USDJPY Will Drop In today’s Trade of the Week column, T3 Live’s Kurt Capra suggested a short of USDJPY: Entry Area: 101.80 Stop Price: 104.00 Target Area: 97.00-98.00 USDJPY has been in a downtrend on the daily chart for quite some time. Last month, it rallied and subsequently fell back to the prior low. Recently, it has been consolidating within a range. It is now at the top of the range where we’ll look for sellers to reemerge. By the way, I recommend you check out Kurt’s forex trading webinar scheduled for after the close tomorrow. 3) Apple Drama? Apple’s (AAPL) had a beautiful rally off the May lows when Warren Buffett announced he took a position in the iPhone maker. Apple shareholders are bound to see even more excitement over the next week. First, Apple sent out invites to its September iPhone 7 unveiling. And more immediately, Bloomberg reported that Apple could learn the outcome of its Irish tax case as early as tomorrow. According to the European Commission, Ireland gave Apple illegal tax breaks, which could result in financial penalties. Estimates of Apple’s damage run anywhere from 100 million to as much as 19 billion euros in a worst-case scenario, so the possible outcome here truly seems like a total mystery. Tuesday’s Trading Calendar US Economics (Time Zone: EDT) 09:00 S&P CoreLogic CS US HPI MoM SA (Jun): prior 0.19% 09:00 S&P CoreLogic CS 20-City NSA Index (Jun): prior 188.29 09:00 S&P CoreLogic CS 20-City MoM SA (Jun): exp. -0.10%, prior -0.05% 09:00 S&P CoreLogic CS 20-City YoY NSA (Jun): exp. 5.12%, prior 5.24% 09:00 S&P CoreLogic CS US HPI NSA Index (Jun): prior 180.7 09:00 S&P CoreLogic CS US HPI YoY NSA (Jun): prior 5.05% 10:00 Consumer Confidence Index (Aug): exp. 97, prior 97.3 Global Economics 03:00 EUR Spanish Flash CPI y/y 04:30 GBP Net Lending to Individuals m/m 08:30 CAD Current Account 21:00 AUD RBA Assist. Gov Debelle Speaks 21:00 AUD ANZ Business Confidence Earnings Before Open: Abercrombie & Fitch (ANF) DSW Inc (DSW) After Close: Bob Evans Farms (BOBE)
Continue Reading -->Trade of the Week: USDJPY Short
T3 Live’s Kurt Capra is stepping in to provide the latest trade idea of the week. Don’t Fear Forex… Attend my free webinar tomorrow and learn why so many stock and options traders are embracing the lucrative world of forex. The Trade Idea: USDJPY Short Entry Area: 101.80 Stop Price: 104.00 Target Area: 97.00-98.00 Why I Like USDJPY Short USDJPY has been in a downtrend on the daily chart for quite some time. Last month, it rallied and subsequently fell back to the prior low. Recently, it has been consolidating within a range. It is now at the top of the range where we’ll look for sellers to reemerge. P.S. Don’t forget to sign up for my FREE forex training session!
Continue Reading -->The Morning Hammer: Let’s Eat Some Dove Soup
Traders are buying into the Fed’s hawkish narrative. On Friday, FOMC Chair Janet Yellen very clearly put rate hikes on the table, and market are buying in. Fed Funds futures now imply a 65% chance of a December rate hike, up from 47% a week ago. And September is up to 42% This has gold and silver slightly offf and the dollar up huge Overnight, Italian business manufacturing missed expectations, as did Greek GDP, Swedish retail sales, and Hong Kong retail sales. Australian home sales were also weak. European equity markets are red, while SPX futures are flat. We’ve got some important economic data today, with personal income/spending, PCE deflator, and Dallas Fed numbers on tap. Even though the Fed’s signalling pretty hard that rate hikes are en route, folks will be watching the PCE deflator closely since it’s the Fed’s preferred inflation indicator. If it’s strong, I’d assume folks push those rate hike odds up even more, and we could probably see an intraday selloff in US Treasuries (which are up fractionally in the early going). Beyond that, it looks like we’re going to close out August the way we came in — quietly. The VIX has been ticking up after putting in what looks like a major low on August 8, but we’re still not seeing much actual movement. We haven’t had a 1% down day in SPX since June 27. And it feel slike the more people look for one, the less likely it is to happen. Volatility is mean reverting. Things go crazy, and then they get quiet. And things get quiet, and then they go crazy. This quiet period today though, it’s one for the ages. I just wanna wake up, you know?
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