Morning Call Express: Debating the Action
In today’s Morning Call Express, T3 Live Chief Strategic Officer Scott Redler breaks down the action in SPX, as well as individual names like AAPL, FB, and DB.
Continue Reading -->T3’s Take 3: Twitter Skyrockets on M&A Chatter, Facebook Not so Much
Trade Options Like a Pro… My buddy Doug Robertson is hosting a FREE options trading webinar next week. Doug’s going to be teaching his unique method for creating income with options, so I suggest you check it out. 1) Twitter Blasts Into Orbit This morning, CNBC reported that Twitter (TWTR) may be in talks to be taken over by Google (GOOGL) or Salesforce.com (CRM). While Twitter has been the source of regular takeover rumors for over a year, traders certainly seemed to believe the new chatter. Twitter shares rose an incredible 21.4% to $22.62 today, its best performance in over 2 years, while call options volume exploded. In fact, Twitter call options set a volume record today, surpassing their last record set on December 26, 2013 – when Twitter’s stock price hit an all-time high of $74.73. 2) Markets Take a Break US stocks took a breather today after 4 straight days of gains and a record high in the Nasdaq Composite yesterday. The S&P 500 fell -0.6% to 2164.69 as traders locked in gains. Large cap tech was weak, with Apple (AAPL) falling -1.7% to $112.71 after market research firm GFK said iPhone 7 sales could disappoint. Crude oil dropped -3.2% to $44.85 after Saudi Arabia dismissed reports of an output freeze or cut at next week’s OPEC meeting in Algiers. As a result, oil and energy services stocks led the decliners’ column. Biotechnology, industrials, and financials were also weak. 3) Facebook Suffers a PR Blow Shares of momentum favorite Facebook (FB) took a little dive today after apologizing for an error in its video measurement tools. Facebook mistakenly overstated the average time its users spent watching videos for the past 2 years. This news raises questions about the success of Facebook’s high-profile push into video, and is causing some frustration on the part of advertisers that make decisions based upon Facebook video metrics. However, Facebook said that its miscalculations did not impact customer billings or the number of video views, which should soften the blow to some extent. P.S. Don’t forget to check out Doug Robertson’s options event. Monday’s Trading Calendar US Economics (Time Zone: EDT) 10:00 New Home Sales (Aug): exp. 600k, prior 654k 10:00 New Home Sales MoM (Aug): exp. -8.30%, prior 12.40% 10:30 Dallas Fed Manf. Activity (Sep): exp. -3, prior -6.2 11:45 Fed’s Tarullo Speaks on Next Steps in Bank Stress Testing 13:30 Fed’s Kaplan Speaks in San Antonio Moderated Q&A Global Economics 04:00 EUR German Ifo Business Climate 05:30 CHF SNB Chairman Jordan Speaks 10:00 EUR ECB Pres. Draghi Speaks 19:10 CAD BOC Gov. Poloz Speaks Earnings Before Open: Cal-Maine Foods (CALM) Carnival Corp (CCL) After Close: None of Significance
Continue Reading -->Twitter Options Go Crazy on Takeover Rumors
We’ve seen many, many Twitter (TWTR) takeover rumors I Googled twitter takeover rumor and got 7.94 million results. Benzinga has a great list of 2016 Twitter takeover rumors here. Obviously, they’ve never come true. And anyone who’s been watching the markets for any period of time knows that 99% of takeover rumors are false. But traders are really, really buying into CNBC’s fresh report that Google (GOOGL) or Salesforce.com could buy Twitter. The stock is up 19% to $22.16. This is Twitter’s best day since July 30, 2014. And call options volume is exploding. As of 11:50 a.m. ET, 458,468 calls have traded vs. a 10-day average of 70,403. This is the second biggest day for Twitter call options volume ever. The record is 618,767 contracts, set on December 26, 2013 when Twitter hit its all time high at $74.73. And frankly, the Twitter takeover rumors remind me of the endless takeover rumors that surrounded BlackBerry (BBRY) a.k.a. the artist formerly known as Research In Motion (RIMM). Interestingly enough, T3 Live did a Twitter poll (ironic, huh?) asking if Twitter will receive a takeover offer. 60% say yes: But I’ll only believe this when I see it.
Continue Reading -->The Morning Hammer: Time for a Break?
Global equities are down for the first time in 5 days as profit-taking sets in. We’ve had a nice central bank-driven surge over the past 2 days and markets are taking a break. Crude oil is red but off morning lows after Bloomberg reported that Saudi Arabia may have offered to cut production if Iran agreed to freeze output. This seemingly increases the probability of some type of coordinated output freeze/cut at next week’s OPEC meeting in Algiers. However, keep in mind that the OPEC news flow has been all over the place. I wouldn’t be surprised to see headlines this afternoon saying there’s no chance of a deal. I’m long oil, so this chatter is good for my portfolio, but the back and forth is getting exhausting. Today’s economic calendar is pretty light, with thee Markit US Manufacturing PMI at 9:45 a.m. and the Baker Hughes Rig Count at 1:00 p.m. We’ll also have Fed heads speaking today. Harker, Mester, and Lockhart will appear together on a panel at the Philly Fed conference at 12:00 p.m., while Kaplan will speak in Houston at 12:30 p.m. Overnight, the euro-area IHS Markit PMI fell in September due to weakness in Germany. Facebook (FB) is taking a hit this morning after it announced it over-inflated video views. Facebook insists that the issue did not impact billing to advertisers, but it certainly raises questions about platform engagement. Yahoo (YHOO) is also off on continued fallout from its security breach. Sentiment is still pretty mixed, so it’s hard to get a gauge of just how overheated (or is it underheated?) the market is. Thus far, the bears have been failing at every turn, so let’s see if they can change that today. I’d still key on biotech (IBB). It’s hard to break the market when biotech’s strong, so that’s a primary area of interest right now. IBB broke above $300 yesterday for the first time since January on a solid string of good news including mergers (both real and imagined) and positive drug data. Good luck out there.
Continue Reading -->T3’s Take 3: NASDAQ Smashes to Record High on Post-Fed Optimism
Prop Trading Information Session Starts Soon! Click here to get in the room now! 1) All-Time Nasdaq Highs The Nasdaq Composite slammed to a new all-time 5341.88 all-time high today on continued momentum in large-cap technology and biotechnology shares. Traders remain pleased with yesterday’s Fed statement, which indicated a slow and steady rise in interest rates over the long run. The S&P 500 gained 0.6% to finish at 2177, while the Russell 2000 rose 1.5% to 1263. All S&P sectors finished in the green today, and we saw relative strength in some of yesterday’s winners like real estate, oil service, airlines, and industrials. Gold miners saw profit taking despite an increase in gold prices, which smells like profit-taking after a massive run up yesterday. 2) Sentiment Check Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. So I regularly check various sentiment measures to get a realistic reflection of the market’s mood. Right now, traders seem somewhat bearish, even though the S&P 500 is less than 1% from its 2193.42 all-time high. The ISE Sentiment Index, AAII Sentiment Survey, and S&P 500 options prices all indicate that traders are very concerned about a drop in the market, which implies that this rally is not widely trusted. You can read more about this here. 3) Buy Buy Airnb? This afternoon, Fortune reported that home/lodging sharing company Airnb secured $555 – $800 million in new financing at a $30 billion valuation. Unfortunately, this means that Airbnb will not join what has been a fairly hot IPO market. Recent new issues like Twilio (TWLO) and Acacia (ACIA) have become darlings among momentum traders. But with this significant cash infusion, it appears that Airbnb won’t be tapping the public markets for financing any time soon. Friday’s Trading Calendar US Economics (Time Zone: EDT) 09:45 Markit US Manufacturing PMI (Sep P): exp. 52, prior 52 12:00 Fed’s Harker, Mester, Lockhart on Panel at Philly Fed Conf 12:30 Fed’s Kaplan Speaks in Houston in Moderated Q&A 13:00 Baker Hughes U.S. Rig Count (9/23): prior 506 13:00 Baker Hughes U.S. Rotary Gas Rigs (9/23): prior 89 13:00 Baker Hughes U.S. Rotary Oil Rigs (9/23): prior 416 Global Economics 03:00 EUR French Flash Services PMI 03:30 EUR German Flash Services PMI 04:00 EUR Flash Services PMI 08:30 CAD Core Retail Sales 08:30 CAD Core CPI Earnings Before Open: Finish Line (FINL) After Close: None of Significance
Continue Reading -->The Point of Gold Recognition?
A few days ago we offered that GDXJ/GLD were at inflection points and that the next leg up to 1425/1450 in gold may be here. Yesterday may have been the first step. The behavior on the first pullback will be key to observe with subsequent follow through. If GDXJ offsets $49-50, which from a bearish perspective is a right shoulder of an H&S top, that should confirm the idea of a new leg up because fast moves come from failed patterns. A failed Head & Shoulders top implies new highs in GDXJ. Moreover, new swing highs in gold will be a point of recognition for those bearish of gold who believe this years rally was a bear market rally. New highs could create a vacuum as the perception that a bull market in gold is underway takes hold. Click here to learn more about Jeff Cooper’s Daily Market Report.
Continue Reading -->Newsflash: This Stock Market Is Not Loved
Permabulls always say everyone’s bearish. And permabears always say everyone’s bullish. Neither side likes to provide evidence for their views. So I regularly run through a wide variety of sentiment measures to get a realistic reflection of the market’s mood. According to 7 sentiment measures I track, traders are slightly bearish, even though we’re within 1% of the all-time SPX high. Let’s go through them one by one: 1) SPX Options Prices – Bearish SPX options prices show a high put skew. I looked at 10% out-of-the money 6-month SPX options. There is currently a 10 point skew on the puts, which is the 98th percentile for the past 5 years. So relative to calls, traders are paying more for 10% OTM 6 month puts than they have 98% of the time over the past 5 years. 2) ISE Sentiment – Bearish The ISE Sentiment Index closed at just 63 yesterday (63 puts for every 100 calls). And its 10-day moving average is just 81.1 — a level that indicates bearishness. Markets tend to overheat with 10-day MA readings well over 100, so we’re not even close to that. 3) AAII Sentiment – Bearish The latest AAII Sentiment Survey shows that 24.8% of individual investors are bullish. This is well below the long-term average of 38.4%, and below the 2016 YTD average of 28.1%. Bearish sentiment is at 38.3%, the highest it’s been since the February 11 bottom, when it spiked to 48.7%. 4) Investors Intelligence – Neutral Yesterday, the Investors Intelligence Survey of newsletter writers showed the 4th straight decline in bullishness with a drop to 44.6% bullish from 49% last week. Bears are at a 10-week high at 24.3%. 5) CBOE Equity Put-Call – Neutral The CBOE Equity-Put Call ratio was 0.63 yesterday, which is above the YTD average of 0.5, and right in-line with the 5-year average of 0.65. This points to neutral sentiment. 6) CNN Fear & Greed Index – Bullish The Fear & Greed Index is at 61, which is modestly in the ‘Greed’ category. F&G operates on a 1-100 scale, and 50 is neutral) 7) Wall Street Strategists – Bullish The average year-end 2017 target price for the S&P 500 is 2391.44, according to Bloomberg. This implies a 9.7% gain from here — basically in-line with historic stock market averages. ********* So we have 3 bearish indicators, 2 neutral indicators, and 2 bullish indicators. Blend them together and you have a slightly bearish crowd. I’m hearing a lot of bears saying that everyone’s complacent… but I just don’t see it. P.S. Interested in prop trading? Sign up for today’s FREE webinar and find out if a prop career makes sense for you.
Continue Reading -->Morning Call Express: Stocks Set to Rise
In today’s Morning Call Express video, T3 Live Chief Strategic Officer Scott Redler breaks down the action post-Fed, and explains what to look for today. P.S. Interested in prop trading? Sign up for today’s FREE webinar and find out if a prop career makes sense for you.
Continue Reading -->T3’s Take 3: Hawks and Doves Collide on Fed Day
WEBINAR: Prop Trading May Not Be Right For You… But it has incredible financial benefits for many, many traders and could make a difference in your bottom line. Click here to learn more… 1) Bank of Japan Starts a Party The Japanese Nikkei and Topix indices had a great night after the Bank of Japan made its monetary policy announcement. The Bank did not go deeper into negative rates as had been rumored, but will instead focus on controlling rates and steepening the yield curve. A steeper yield curve means bigger profits for financial institutions, so Japanese banks and insurers staged huge rallies. The yen also rallied against major currencies. Many investors have been concerned about the impact of negative rates, so the new strategy was received favorably. The positive action in Japan flowed through to Europe, which also had a big stock rally with notable strength in financials. 2) The Fed! As expected, the Fed left interest rates unchanged. But what was really interesting was that they gave ammunition to both hawks and doves. 3 Fed officials dissented from the decision, voting to raise rates. The Fed also said that the rate hike case strengthened, which all but seals the deal for a December rate hike. That certainly seems in-line with all the hawkish commentary we’ve been hearing from Fed officials. However, the Fed now expects 2 rate increases in 2017, down from 3 in June. The Fed also cuts its GDP and interest rate forecasts, and said that inflation is still below its goals. So the overall picture is actually pretty mixed – and I’d argue that today may have been a victory for the doves. 3) The Market Reaction For the third day in a row, the S&P 500 hit an early morning high before ticking lower. However, the Fed statement ignited a very solid stock rally into the close, with the S&P rising 1.1% to 2162.87. The Russell 2000 powered up 1.4% to 1245.02. And since the Fed wasn’t as hawkish as many traders expected, we saw rallies in bonds and commodities after the announcement hit. Meanwhile, the dollar fell sharply on Japan’s lack of action and the Fed’s mixed statement. WTI Crude oil rose 3.5% after the American Petroleum Institute and Energy Information Administration reported large drops in US crude inventories. That had energy stocks in the winners’ column. But the biggest hot mover today was the junior gold miners ETF (GDXJ), which rose a whopping 8.0% on the post-Fed pop in gold. Thursday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Chicago Fed Nat Activity Index (Aug): exp. 0.15, prior 0.27 08:30 Initial Jobless Claims (9/17): exp. 261k, prior 260k 08:30 Continuing Claims (9/10): exp. 2141k, prior 2143k 09:00 FHFA House Price Index MoM (Jul): exp. 0.30%, prior 0.20% 09:45 Bloomberg Economic Expectations (Sep): prior 44.5 09:45 Bloomberg Consumer Comfort (9/18): prior 42.2 10:00 Existing Home Sales (Aug): exp. 5.45m, prior 5.39m 10:00 Existing Home Sales MoM (Aug): exp. 1.10%, prior -3.20% 10:00 Leading Index (Aug): exp. 0.00%, prior 0.40% 10:30 EIA Natural Gas Storage Change (9/16): exp. 54, prior 62 10:30 EIA Working Natural Gas Implied Flow (9/16): exp. 54, prior 62 11:00 Kansas City Fed Manf. Activity (Sep): exp. -3, prior -4 13:00 Fed’s Lockhart Gives Introductory Remarks on Labor Market Global Economics 09:00 EUR ECB Pres. Draghi Speaks 13:00 GBP BOE Gov. Carney Speaks Earnings Before Open: Autozone (AZO) Rite Aid Corp (RAD) After Close: None of Significance
Continue Reading -->The Morning Hammer: Japan Gets Us All Warmed Up for the Fed
The Japanese Nikkei and Topix indices had a great night after the Bank of Japan made its monetary policy announcement. The Bank did not go deeper into negative rates as had been rumored, but will instead focus on controlling rates and steepening the yield curve. A steeper yield curve means bigger profits for financial institutions, so Japanese banks and insurers are ripping. The yen is also rallying against major currencies. The Bank said it will focus on buying ETF’s that track the Topix rather than the Nikkei, which some traders expected. Europe also woke up on the BoJ news, with a huge rally in financials. The positivity is extending to the US, with SPX futures in positive territory. Today could be a big day for us with the Fed rate decision (2:00 p.m.) and press conference (2:30 p.m.). You can read my thoughts on the Fed here. Markets appear to be braced for no rate change and a hawkish statement. The anarchist in me actually hopes Barclays and BNP Paribas are correct in predicting the Fed will raise rates today, just to shake things up a bit and give us some more of the volatility we saw last week. The permabear in me thinks there’s a good chance the Fed doesn’t hike and actually backs down its hawkish chatter a bit. But I’m not going to roll the dice. I’m going to sit tight and wait for the dust to settle before committing to a view. We have crude oil inventories at 10:30 a.m. ET. The American Petroleum reported a large -7.5 million drop in US inventories overnight. Keep in mind that oil sold off hard after the past 2 weekly inventory reports, even though both were very bullish. It looks like traders are selling the rips ahead of the big OPEC meeting in Algiers. JP Morgan increased its Apple (AAPL) iPhone production estimates based on channel checks. That’s helping Apple a little bit. Credit Suisse is out saying European bank are cheap based on dividend yields and relative valuation. Fed day is obviously an anything goes day — especially with the BoJ in the mix — but I’d keep watching the usual suspects like the Russell 2000 and biotech (IBB). Biotech has been a big upside outlier the past couple days on a very positive news flow (drug approvals, takeovers), and it’s hard to break this market when biotech is doing well.
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