Scott Redler’s Chart Attack: AAPL, FB
Yesterday’s tactical plan for Apple (AAPL) to buy/test near the 8day was a good road map. Now we’ll see if $108.30ish holds and builds an upper floor to digest a nice post earnings move from $102.75 to $110.23. Some of my spreads expire this Friday. September will sit. Facebook (FB) has been digesting/lethargic since they sold the earnings report at highs. Yesterday could be a start as I nibbled at the 21 day which has been support. In order for it to get better, it needs to take out and close above $124.40 but the real area is $126. Positions Disclosure: Scott J. Redler is long AAPL call spreads, FB P.S. Want to get an edge in today’s algo/HFT-driven markets? Click here to learn about Rob Smith’s FREE Quant Edge Webinar
Continue Reading -->Crude Oil Rocks… and 4 Other Thoughts on Today’s Market
Want to get an edge in today’s algo/HFT-driven markets? Click here to learn about Rob Smith’s FREE Quant Edge Webinar 1) The Beast! Crude oil is an absolute beast with 2 key catalysts pushing it: 1) Fed dovishness, which is pushing down the dollar and 2) hopes for an output freeze or cut at the September OPEC meeting. It seems like everyone forgot that OPEC disappointed at the June meeting after a ton of anticipation that a policy change was in the wings. But that’s the nature of momentum. And oh yeah — check out the nice, slow grind up in HYG. That is a good sign for the bulls. 2) Buh-Buh-Buh-Biotech Biotech (IBB) is putting in a nice bounce off the lows this morning and outperforming by a solid margin. As with HYG, this is a good sign for the bulls And it’s an area the bears need to break to get a real downside move. 3) Russell 2000 Same story as HYG/IBB. 4) Zee VIX! Yesterday’s intraday rally in SPX and today’s rally up to break-even is sending the VIX down below 12 again. This is bad news for me since I’m very much long volatility through VIX calls. I admit I’m growing restless. We haven’t had a 1% down day since June 27, which seems crazy. This stretch is even more boring than the April-May snoozefest. 5) Twilio (TWLO) The other day, I listed 3 reasons I would not short Twilio. That post received a lot of attention. The stock has pulled back a bit, but it still looks like a pretty dangerous short. Put option open interest has gone from 9,710 on Friday, August 5 to 34,394 yesterday. Plus, on August, 5, call open interest was almost double the put open interest. And as of yesterday, the put open interest exceeds the call side. The stock is also Hard Borrow, has big short interest, and there is still a massive put skew. Unless the broader markets really break down, I suspect Twilio shorts will get steamrolled.
Continue Reading -->Morning Call Express: Scattered Opportunities
In today’s Morning Call Express, Scott Redler talks about the SPX and how it has held the 21day. He also looks at various sectors like the IBB and XLE. He also looks at a couple individual names.
Continue Reading -->T3’s Take 3: The Fed Hits and Nothing Changes
1) Fed Schmed… Today, the Fed released the Minutes from its July meeting. Traders were pricing in a 51% chance of a December rate hike, which meant expectations were split right down the middle. Unfortunately, we did not get much on the Fed’s near-term trajectory. Some FOMC officials are waiting for signs of improved inflation trends. Others were more optimistic, saying that the labor market is approaching maximum employment, and that progress in reaching the Fed’s inflation goals is expected continue. But overall, the Fed leaned dovish, which sent the dollar lower, and commodities higher. 2) The Grind Continues Following lackluster action overseas, US markets were weak in early trading, and the S&P 500 looked like it may even put in its first down day since July 27. But after dipping to 2168.50, the index ran up in a straight line, aside from a tiny dip following the release of the FOMC Minutes. By day’s end, the S&P managed to squeeze into the green with a 0.2% gain. Utilities led the winners’ column on the Fed’s dovishness, while small caps showed relative weakness. And much to my chagrin, the VIX hit an early high at 13.71, but collapsed to 12.17 as stocks climbed off the lows. 3) Crude Oil Keeps on Chugging Oil prices rallied again today after a bullish inventory report from the Energy Information Administration. Economists expected a 950,000 increase in inventories, but they fell a whopping -2.5 million. Gasoline inventories also fell significantly. Oil was also boosted by the weak dollar, and ongoing hopes an OPEC production freeze or cut. As a result, energy stocks outperformed today. Thursday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Initial Jobless Claims (8/13): exp. 265k, prior 266k 08:30 Continuing Claims (8/6): exp. 2141k, prior 2155k 08:30 Philadelphia Fed Business Outlook (Aug): exp. 2, prior -2.9 09:45 Bloomberg Economic Expectations (Aug): prior 44.5 09:45 Bloomberg Consumer Comfort (8/14): prior 41.8 10:00 Fed’s Dudley Answers Questions at Press Briefing in New York 10:00 Leading Index (Jul): exp. 0.30%, prior 0.30% 10:30 EIA Natural Gas Storage Change (8/12): exp. 26, prior 29 10:30 EIA Working Natural Gas Implied Flow (8/12): exp. 26, prior 29 16:00 Federal Reserve President John Williams Speaks in Anchorage 20:00 Fed’s Kaplan to Speak in Dallas Global Economics 04:30 GBP Retail Sales m/m 08:30 CAD Foreign Securities Purchases Earnings Before Open: Canadian Solar Inc (CSIQ) Wal Mart Stores (WMT) After Close: Gap Inc (GPS) Ross Stores (ROSS)
Continue Reading -->The Market Is Setting Up a Different Move
Quantitative Analysis is the future of trading. Rob Smith will show you why. Click here for more info. This is the first time we have seen follow-through in the markets in a while. That should be telling and it looks as though we are finally setting up for a pullback. We have entered the August 5 gap and now look set to fill it and some more. A good check back in a healthy market would be to pull back to around the 50 day moving average or around 213 in SPY. Its only a couple of percentage points below here, but picking up that kind of alpha is what I like to do. I am selling down my longs here and looking to buy back lower.
Continue Reading -->Scott Redler’s Chart Attack: SPY and AAPL
Quantitative Analysis is the future of trading. Rob Smith will show you why. Click here for more info. Apple (AAPL) AAPL has given nice opportunities post-earnings. Yesterday, I got out of the stock and turned my calls into spreads. If I see a pullback toward $108.50, I might nibble back on stock and calls. Bigger support is $107.50. SPY Yesterday, SPY broke the 8 day again. Now we’ll see what’s next. 21-day support is closer to $216.80ish. Disclosure: Position in AAPL call spreads
Continue Reading -->The Morning Hammer: Is Today the Day for a Real Move?
Quantitative Analysis is the future of trading. Rob Smith will show you why. Click here for more info. World markers are a little shaky following yesterday’s late-day selloff in the S&P 500, and hawkish comments from Fed officials. However, Japan is up after the yen took a little break, which is helping shares of exporters. UK jobless claims were better-than-expected in July, while Singapore’s exports dropped on weak orders from China, Indonesia, and the US. Crude oil is down this morning after the American Petroleum Institute reported a 1 million barrel drop in US crude inventories. This was a bigger reduction than expected, but gasoline supplies were up 2.2 million barrels, raising concerns about a glut. The EIA reports its inventory numbers at 10:30 a.m. ET so keep an eye out. Target (TGT) cut its annual guidance due to weak sales, and Lowe’s (LOW) reported a miss. This is disappointing as we’re coming off a couple days of positive retail stock news. On the deal front, Bloomberg is reporting that United Bankshares (UBSI) is in talks to acquire Cardinal Financial (CNFL). SPX and NDX futures are as flat as an ironing board, so the holding pattern continues in the early going. However, yesterday I reiterated my view that the VIX indeed hit a bottom last week, and today we could see vol continue to pick up. Aside from the important crude oil inventories at 10:30 a.m., we’ve got FOMC minutes hitting the tape at 2:00 p.m. Right now, traders are pricing in a 51% probability of a December rate hike, which means the market is split right down the middle. So there’s a chance that at least half the market comes away disappointed, which could be a catalyst for movement. The regional banks (KRE) could be especially big movers, and of course, the dollar and gold will be in play. Yesterday, NY Fed President Dudley (voting member) said a rate hike could come next month, so some folks are thinking that’s on the table. But the big problem with trying to game the Fed is that you not only have to predict the timing of policy actions, but the wording of commentary. Markets can make huge moves on the inclusion or exclusion of a few words, so you can drive yourself batty trying to make sense of it all, ESPECIALLY since the Fed always has the back door of “data dependency.”
Continue Reading -->Scott Redler’s Morning Call Express: Slippery
In today’s Morning Call Express, T3 Live Chief Strategic Officer discusses the action in FXI and SPX, as well as FB, AAPL, and BABA. Quantitative Analysis is the future of trading. Rob Smith will show you why. Click here for more info.
Continue Reading -->T3’s Take 3: Volatility Returns for a Small Bear Victory
1) Volatility Returns! Volatility finally returned as stocks finally showed some signs of weakness following the past month’s upward grind. The S&P 500 fell -0.6% to 2178.15, making today 27 days without a 1% move. However, we saw relative weakness in tech, biotechnology (IBB), andsmall caps (IWM), which have led the market up since the 6/24 Brexit dip. This indicates that traders are entering profit-taking mode, which is introducing volatility back into the equation. The VIX rose 6.6% to 12.59, putting it 14% above last week’s low of 11.02. We also saw a significant increase in put-call ratios today, which means more traders betting against the market. And with tomorrow’s crude oil inventory report and the release of the FOMC Minutes, we may see even more volatility. 2) Crude Oil Booms, but Will It Last? Crude oil hit a fresh high of $46.62 today as the US dollar fell amid ongoing speculation that OPEC may freeze or cut output at its September meeting. This is a repeat of oil’s run higher into the June OPEC meeting, which did not result in any policy changes. Shortly thereafter, crude oil topped out before dropping to a $39.19 low on August 3. Given that crude oil inventories have been rising in recent weeks, it seems that traders are once again pricing in OPEC taking action to support prices. So in all likelihood, the oil rally will get derailed if OPEC does not deliver the goods. 3) Is Twilio a Short? Internet infrastructure play Twilio (TWLO) is one of the hottest stocks in the market, having nearly tripled off the June lows. This has many traders thinking it’s time to short the stock. However, not only is short interest in Twilio very high, but options traders have been placing massive bearish bets on the stock. This implies that Twilio is a very crowded short, which could cause a squeeze higher. You can read my thoughts on Twilio in more detail by clicking here. Wednesday’s Trading Calendar US Economics (Time Zone: EDT) 07:00 MBA Mortgage Applications (8/12): prior 7.10% 10:30 DOE U.S. Crude Oil Inventories (8/12): exp. 950k, prior 1055k 10:30 DOE Cushing OK Crude Inventory (8/12): exp. 500k, prior 1163k 10:30 DOE U.S. Gasoline Inventories (8/12): exp. -1700k, prior -2807k 10:30 DOE U.S. Distillate Inventory (8/12): exp. -600k, prior -1959k 10:30 DOE U.S. Refinery Utilization (8/12): exp. -0.60%, prior -1.10% 10:30 DOE Crude Oil Implied Demand (8/12): prior 16698 10:30 DOE Gasoline Implied Demand (8/12): prior 10223.3 10:30 DOE Distillate Implied Demand (8/12): prior 5202.9 13:00 U.S. Fed President James Bullard Speaks in St. Louis 14:00 U.S. Fed Releases Minutes from July 26-27 FOMC Meeting 14:00 FOMC Meeting Minutes (7/27) Global Economics 04:30 GBP Average Earnings Index 04:30 GBP Claimant Count Change 21:30 AUD Unemployment Rate Earnings Before Open: American Eagle Outfitters (AEO) JA Solar Holdings (JASO) After Close: Cisco Systems (CSCO) L Brands (LB)
Continue Reading -->3 Reasons I Would Not Short Twilio (TWLO)
Internet infrastructure play Twilio (TWLO) is one of the hottest stocks in the market, having nearly tripled off the June lows. This morning, it hit fresh a high of $64.16 before pulling back to $60.71. A lot of folks are now talking about betting against Twilio, but I would not consider shorting it for 3 simple reasons: 1) Put Skew There is a significant put skew in TWO options, meaning traders are paying up a lot more money for puts than they are for calls. For example, October $60 put is going for $11.20 while the call is just $7.50. This is a sign that options traders are desperate to bet against the stock, a sign of massive embedded negativity. 2) Ramping Put Volume Put options volume has exploded. Today, 6,300 TWLO puts have traded. Yesterday, 27, 308 traded. The day before, 5,578 traded. In the 29 days prior, it traded an average of just 1,306 puts a day. This is another sign that traders are desperate to bet against the stock. 3) High Short Interest Short interest is 24% of the float as of 7/29, and judging by the options action, it’s probably even higher today. Conclusion The current setup in Twilio is eerily reminiscent of GoPro (GPRO) and Ambarella (AMBA) in late 2014. In both cases, we were looking at fad stocks with huge momentum that were also very crowded shorts. The bears arguing that “what goes up must come down” got steamrolled. If the market falls, odds are Twilio (TWLO) drops too. But make no mistake — if you short this stock, you are playing with fire, because it is indeed a very crowded short. P.S. Have you signed up for Dave Green’s FREE trading webinar yet?
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