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Rob Smith’s Daily Recap Video: Another Awesome Fed Day
In today’s Daily Recap video, T3’s Rob Smith breaks down the action on a very exciting Fed day.
Continue Reading -->T3’s Take 3: Janet Yellen Sets Off a Rollercoaster
1) Fed Follies: Jackson Hole Edition Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got. At her highly-awaited Jackson Hole speech, Federal Reserve Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials. Initially, the market made the obvious moves — the US dollar spiked, and gold and US Treasuries collapsed. However, the moves were very quickly retraced, with the dollar and gold falling. This implied the market was having a massive “sell the news” reaction to Yellen meeting market expectations. 2) The Reaction to the Reaction to the Reaction Following that counter-reaction, the big hawk trade — strong dollar and weak gold/bonds — continued. Here is an intra-day chart of the US dollar index starting at 8:00 a.m. ET, which is a pretty good illustration of the market reaction to Yellen’s speech: As you can see, the dollar briefly dove before skyrocketing into the equity market close. We saw similar zaniness in gold and US Treasuries. 3) Equity Traders Take a Little Ride Fed funds futures now imply a 63% probability of a December rate hike, up from 47% a week ago. The prospect of higher rates had equity traders taking profits. At one point, the S&P 500 looked like it may have its first 1% down day since June 27, and the VIX hit 14.93, a level not seen since early July. However, stocks crawled up into the close, with the index finishing down -0.2% at 2169.04. Stocks that benefit from lower interest rates, like utilities, gold miners, and real estate names, took major hits. On the plus side, biotechnology had a solid up day after afternoon failures on Wednesday and Thursday. P.S. Want to up your trading skills? Check out our free webinars! Monday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Personal Income (Jul): exp. 0.40%, prior 0.20% 08:30 Personal Spending (Jul): exp. 0.30%, prior 0.40% 08:30 Real Personal Spending (Jul): exp. 0.20%, prior 0.30% 08:30 PCE Deflator MoM (Jul): exp. 0.00%, prior 0.10% 08:30 PCE Deflator YoY (Jul): exp. 0.80%, prior 0.90% 08:30 PCE Core MoM (Jul): exp. 0.10%, prior 0.10% 08:30 PCE Core YoY (Jul): exp. 1.50%, prior 1.60% 10:30 Dallas Fed Manf. Activity (Aug): exp. -3, prior -1.3 Global Economics All Day GBP Bank Holiday 19:30 JPY Household Spending y/y 21:30 AUD Building Approvals m/m Earnings Before Open: None of significance After Close: None of significance
Continue Reading -->Gold Screams Afters Yellen Fails to Move the Needle
Traders were looking for a hawkish Yellen and a hawkish Yellen is what they got. At her highly-awaited Jackson Hole speech, FOMC Chair Janet Yellen said that the case for rate hikes “has strengthened in recent months,” echoing recent hawkish comments from other Fed officials. Initially, the market moved as we expected — the US dollar spiked, and gold and US Treasuries collapsed. However, the moves were very quickly retraced. Here’s the dollar index: Here is gold (GLD): The junior gold miners (GDXJ): TLT: Crude oil is also on FIRE: So we are getting the ‘sell the news’ scenario I presented in today’s Morning Hammer column. (not that I bet on it…) Since Yellen delivered exactly what the market expected, the hawk trades (gold down, Treasuries down) aren’t getting any additional follow-through. In fact, rate hike expectations have actually FALLEN since the speech. Earlier today, Fed Funds futures were pricing in a 57% chance of a December rate hike. That number is down to 55% so Yellen did not move the needle. Biotech (IBB) also ripped off morning lows and is up 1.5%. The VIX is down 8.4%. Meanwhile, SPX fell about 5 points before extending higher above 2187. We’ve gone 34 days without a 1% move in the SPX. That streak may indeed break today. Next step: let’s see if these counter-reactions hold. Fed says often see multiple dramatic moves before the closing bell hits.
Continue Reading -->The Morning Hammer: Will Yellen Pull a Fast One at Jackson Hole?
All eyes are on FOMC Chair Janet Yellen’s 10:00 a.m. ET speech in Jackson Hole. Fed officials have been out in force the past few weeks pushing a hawkish narrative, and the market has responded. Fed fund futures now imply a 57% chance of a December rate hike, up from 47% a week ago and just 9% after the 6/24 Brexit. 57% is far from certain. However, the trend has been up, and the trend is what counts. This has been pushing up bank stocks and putting pressure on gold, particularly the miners (GDX). So now we’re at an interesting juncture. If Yellen indeed comes out hawkish as many traders expect, I wonder if we get an immediate spike in the dollar and dip in gold, with both moves getting reversed by the end of the day. I almost feel like all the Fed heads have been overselling the idea that rate hikes are coming, which could set up a sell the news situation. On the flip side, if we get a repeat of June — doves flying when everyone’s looking for hawks — expect a monumental rally in GDX. SPX futures are as flat as an ironing board, and crude oil is down fractionally. Aside from all the Fed-sanity, I’m really interested to see what biotech does. For 2 straight days, IBB has gone from first in the morning to worst in the afternoon on heavy volume. (see chart) The alleged cause has been Presidential candidate Hillary Clinton’s attacks on Mylan’s (MYL) pricing practices, which raises fears about future price controls. The reality is that no politician — not even the President of the United States — can simply wave a magic wand and lower drug prices. So I wonder if traders have been looking for excuses to sell, and Hillary happened to serve it up. IBB is down -16% on the year, but it’s also up 19% from its February low. We’ve also got GDP, U. of Michigan Sentiment, and the Baker Hughes Rig Count on the economic calendar. So maybe, just maybe we’ll get some excitement today after 34 days without a 1% move in SPX.
Continue Reading -->T3’s Take 3: The Fed Is Dead Ahead
The power of quantified trading… Next Thursday, T3’s Rob Smith is hosting a special strategy session on his unique Quant Edge methodology. Learn more about it. 1) All Eyes on Yellen Traders are eagerly awaiting Fed Chair Janet Yellen’s speech in Jackson Hole at 10:00 a.m. ET tomorrow. Fed officials have been very hawkish as of late, and today, Kansas City Fed President Esther George said on Bloomberg TV that higher rates were warranted since the US is near full employment with rising inflation. Dallas Fed President Robert Kaplan also offered hawkish comments on CNBC,. Traders are now pricing in a 55% chance of a December rate hike, up from 47% 2 weeks ago and just 9% after the June 24 Brexit. However, keep in mind that the Fed has been fairly unpredictable this year. So it will be interesting to see if Yellen gives the hawkish statements everyone is expecting. 2) Flat as an Ironing Board The market once again went nowhere, with the S&P putting in its 34th day without a 1% move. The index finished down -0.01% at 2172.47, and there wasn’t much action in the other indices either. Economic data mostly solid today, with jobless claims and durable goods coming in better-than-expected. The data supports the case for Fed rate hikes. This and all the hawkish chatter sent up regional bank stocks, and pushed gold lower. And in a near-perfect repeat of yesterday, biotech stocks led in the early going before falling hard in the afternoon on pricing controversies. The Nasdaq Biotech ETF (IBB) fell -1.2% to 282.87. 3) Jeff Cooper’s Take on Biotech Here’s what Jeff Cooper had to say about the action in IBB: Yesterday, I mentioned that the fall in the biotechs on the heels of Hilary’s comments reminded me of the pop in the bubble in 2000 on Bill Clinton’s and Tony Blair’s comments on biotech and the genome. A daily IBB chart shows yesterday’s large range outside down day (LROD or Lighting Rod) on a large increase in volume. Yesterday’s lows nominally undercut the prior peaks from the spring and summer and the previous breakout pivot. IBB is in a potentially weak position if today is a Pause Day prior to downside follow-though. P.S. Sign up for one of our FREE trading webinars. US Economics (Time Zone: EDT) 08:30 Advance Goods Trade Balance (Jul): exp. -$63.0b, prior -$63.3b 08:30 Wholesale Inventories MoM (Jul P): exp. 0.10%, prior 0.30% 08:30 GDP Annualized QoQ (2Q S): exp. 1.10%, prior 1.20% 08:30 Personal Consumption (2Q S): exp. 4.20%, prior 4.20% 08:30 GDP Price Index (2Q S): exp. 2.20%, prior 2.20% 08:30 Core PCE QoQ (2Q S): exp. 1.70%, prior 1.70% 10:00 Fed Chair Yellen to Speak at Jackson Hole Policy Symposium 10:00 U. of Mich. Sentiment (Aug F): exp. 90.8, prior 90.4 10:00 U. of Mich. Current Conditions (Aug F): prior 106.1 10:00 U. of Mich. Expectations (Aug F): prior 80.3 10:00 U. of Mich. 1 Yr Inflation (Aug F): prior 2.50% 10:00 U. of Mich. 5-10 Yr Inflation (Aug F): prior 2.60% 13:00 Baker Hughes U.S. Rig Count (8/26): prior 491 13:00 Baker Hughes U.S. Rotary Gas Rigs (8/26): prior 83 13:00 Baker Hughes U.S. Rotary Oil Rigs (8/26): prior 406 Global Economics 04:00 EUR M3 Money Supply y/y 04:30 GBP Second Estimate GDP q/q 04:30 GBP Prelim. Business Investment q/q All Day Jackson Hole Symposium Earnings Before Open: Big Lots (BIG) After Close: None of significance
Continue Reading -->Webinar Replay: What You Need to Know About Forex
In this special webinar, T3 Live Forex Strategist Kurt Capra breaks down: How to get started in forex trading Why stock and options traders should consider forex The 5 major lies that stop traders like you from making money in forex Interested in joining our next Forex Profit Accelerator Trading Lab at a special discounted rate? Call our team at 1-888-998-3548 or email info@t3live.com.
Continue Reading -->Market Update: Crude Oil’s Freaky Mirror Image
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it The headline number on this morning’s crude oil inventory report was an almost perfect mirror image of last week’ The consensus was -850K. The actual number was +2501K. Last week, the consensus was +950K. And the actual number was -2508K. Weird, huh? Now let’s talk about the reaction. WTI crude is over $1 off morning highs, and the VIX has spiked to 13.20. The weak oil report is impacting sentiment already. The ISE Sentiment Index is at just 39 (39 call options bought for every 100 puts). However, as it stands now, we’re only seeing intermittent weakness in equities. The S&P 500 is down just -0.2, and I’m seeing one very important pocket of strength: the S&P Biotech ETF (XBI) is up 1.4%, and it is just plain hard to bet against this market when biotech is doing so well. We have not had a real down day since June 27. If today is to be the start of something real for the bears, they’ve got to attack biotech. They’ve already started beating on some of the hot new issues like Acacia (ACIA) and Line Corp. (LN), but biotech is key. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
Continue Reading -->Scott Redler’s Chart Attack: SPY & GDX
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it SPX futures are up 1-2 handles in a very choppy lethargic trend to the upside. I would expect more of the same until Friday. We’ll see if we can break above $219.60ish, if all those warnings about a market correction since MAY come to light: Stay tuned. GDX has been the place to be in 2016 with lots of buyable pivots and trends. Recently, it lost momentum when it broke $30.40. A break and close below the 50 day could trigger selling in this crowded trade. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
Continue Reading -->The Morning Hammer: The Bears Are Long F.O.M.O.
Get a Quant Edge in Today’s Markets Tomorrow after the close, Rob Smith is hosting a FREE webinar on his unique Quant Edge Trading Strategy. Read all about it The waiting game continues. We’ve now gone 32 trading days without a 1% up move, and 40 days without a 1% down move. It’s been a beautiful ride for the bulls becuase they’ve been enjoying a picture-perfect grind up. But it’s been hell for bears, particularly those buying put options. The slow upward movement and declining volatility slowly kills the value of those puts a penny at a time. I always think it’s far better to lose fast, because at least you get it over with. Now it seems like a lot of bears are tempted to capitulate to stop the slow bleed. But at the same time, there’s a big FOMO (fear or missing out) element. What if you cover just ahead of what seems like an inevitable market drop? I’m long VIX calls (which is basically a highly leveraged SPX short), so that’s the boat I’m in. I’m down about 9%, which isn’t the end of the world on an options positions, but I admit I’m growing restless. SPX futures are up fractionally following a decent up day in Europe. The stalemate looks set to continue ahead of FOMC Chair Janet Yellen’s Jackson Hole speech this Friday. It seems like traders are starting to buy into the recent hawkish trend in Fedspeak. Fed fund futures now imply a 53% chance of a December rate hike, up from 45% a month ago and 9% post-Brexit on June 27. That has gold and Treasuries sagging a bit. Crude oil is off a little on the American Petroleum Institute inventory report. The API said we had a 4.5 million barrel build in US crude stocks last week, which was a surprise. We get EIA data today at 10:30 a.m. ET. The current consensus calls for an -850K decline in inventories. However, remember that oil has been moving on chatter about the September OPEC meeting. We’re seeing a lot of conflicting news reports about whether OPEC will institute an output freeze or cut, so it’s getting hard to gauge the importance of data. I’m long oil (through the KYN and BGR closed-end funds), but I’m not going to hazard a guess as to what OPEC’s going to do. We’ve also got Existing Home Sales and the FHFA House Price Index on tap today. Housing stocks were up huge on yesterday’s big New Home Sales numbers, so maybe there’s action there again today. But I think biotech (IBB) may tell the tale for now. That group’s been pretty strong the past couple of days, and recent history shows that when biotech does well, the bears tend to fail. Good luck out there. P.S. Don’t forget to sign up for Rob Smith’s FREE webinar.
Continue Reading -->T3’s Take 3: The Bull Just Keeps on Grindin’
Why are so many traders terrified of forex? This afternoon, my buddy Kurt Capra is hosting a FREE webinar on how you can get started in the lucrative, exciting world of forex. Click here to learn more. 1) Hot Oil! Crude oil was weak in the early going, but shot up intraday after Reuters reported that Iran may support a production freeze at the September OPEC meeting. Oil has been seeing some minor profit-taking on speculation that OPEC may disappoint the market by keeping production unchanged. The push up in oil helped energy stocks outperform, and the S&P Energy ETF (XLE) rose 0.7%. Oil service stocks were also decent, with the Vaneck Vectors Oil Service ETF (OIH) up 0.5%. 2) 31 Days of Nothing We’ve now gone 31 days without 1% move in the S&P 500 as the index continued its slow upward grind with a 0.2% rally to 2186.90. Traders were encouraged by solid European economic data and the aforementioned oil rally. Housing stocks were up big on strong earnings from Toll Brothers (TOL) and impressive US New Home Sales, which are at a multi-year high. Biotechnology and pharmaceutical names also outperformed for the second straight day, and regional banks were up nicely as Treasury yields rose. Gold miners were in the decliners’ column on a slump in gold prices. 3) Second Term Parallels Today, my colleague Jeff Cooper pointed out that the market fell hard at the end of Presidents’ Bill Clinton and George W. Bush’s second terms: The market rallied into September 1, 2000 as Clinton’s second term was coming to a close, and then dropped 41.5% into its November low. The market topped on August 15, 2008 as Bush’s second term was ending, and lost 48.4% going into a November low. Continue reading… P.S. Click here to sign up for our forex event! Wednesday’s Trading Calendar US Economics (Time Zone: EDT) 07:00 MBA Mortgage Applications (8/19): prior -4.00% 09:00 House Price Purchase Index QoQ (2Q): prior 1.30% 09:00 FHFA House Price Index MoM (Jun): exp. 0.30%, prior 0.20% 10:00 Existing Home Sales (Jul): exp. 5.51m, prior 5.57m 10:00 Existing Home Sales MoM (Jul): exp. -1.20%, prior 1.10% 10:30 DOE U.S. Crude Oil Inventories (8/19): exp. -850k, prior -2508k 10:30 DOE Cushing OK Crude Inventory (8/19): exp. -300k, prior -724k 10:30 DOE U.S. Gasoline Inventories (8/19): exp. -1700k, prior -2724k 10:30 DOE U.S. Distillate Inventory (8/19): exp. 500k, prior 1939k 10:30 DOE U.S. Refinery Utilization (8/19): exp. -0.55%, prior 1.30% 10:30 DOE Crude Oil Implied Demand (8/19): prior 17148 10:30 DOE Gasoline Implied Demand (8/19): prior 10216.4 10:30 DOE Distillate Implied Demand (8/19): prior 4754 Global Economics 04:30 GBP BBA Mortgage Approvals Earnings Before Open: Express Inc (EXPR) After Close: GUESS? Inc (GES) HP Inc (HPQ) Williams-Sonoma (WSM) Workday Inc (WDAY)
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