I Won’t Argue With the Results.. and 4 Other Thoughts on Today’s Action
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! 1) More Lousy Data Post-Brexit, one pleasant surprise we’ve seen has been a pretty nice streak of positive economic data surprises. But starting with the 7/29 GDP report, we’ve seen quite a few lousy reports, culminating in today’s Empire Manufacturing miss. Individual economic data points are little more than noise. The trend is far more important. Look at this chart of the Citi US Economic Surprise Index — it is definitely sliding. For now, the weak data is being ignored. But I wonder if that changes with the avalanche of big reports coming over the next 2 days (Housing Starts, Building Permits, CPI, Industrial Production, etc.). 2) Can’t Argue With the Results Crude oil got shaken up by this morning’s Interfax report that OPEC will not pursue an output cut at the September meeting. However, oil prices surged right back and oil stocks are outperforming the major indices. It’s probably best if traders do not expect an output cut. Last time around at the 6/2 OPEC meeting, traders came in expecting a cut and didn’t get it, and that was right near the interim top in oil. 3) Mr. Russell One common complaint the bears are throwing around is that the Russell 2000 has not confirmed the all-time highs in SPX/DJIA/NASDAQ/NDX. It would be nice if the Russell could make new all-time highs, but there’s no so such thing as a perfect bull move. Besides, the Russell is rapidly making up the difference and outperforming SPX today by a more than 2:1 ratio. 4) Bio-POWER! Biotech is back on the warpath and making its way toward IBB’s $299.49 high on 8/4. Round numbers are meaningless but I bet traders would be excited to see it make a clean move about $300. And better yet — XBI, which is more representative of the broader spectrum of biotech stock — is outperforming IBB by a big margin today. IBB makes bigger headlines, but XBI is actually more important. 5) Headline of the Day S&P 500 Dregs Stage Uprising in Bull Market That Now Makes Sense There’s something odd about declaring that the market “now makes sense” after a series of record highs, and adding that “there’s a lot to like in a market as hated as this one.” This article “feels” like the type of thing you would read towards the end of a frustrating rally — not the middle of one. That said, the bulls are putting on a good show today and again, I don’t argue with the results, even when they hurt me.
Continue Reading -->Futures Update: NDX/NQ Make All-Time Highs
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! As NDX/NQ make new all-time highs, so does ES, although that has been routine for some time. Projected risk for NQ is at 4858.50, but we could pause before that. Support is at 4818.50, the initial upside risk level is at 4834.25. GC is still holding on for dear life, thanks to a Yen bid. Resistance is at 1348.40 and 1350.90. ZN is still trading inside the NFP value area, 132’025/132’190 (shaded on chart). It’s interesting to note the confluence at 132’190 between the NFP value area high and the ten year auction VPOC (volume point of control). Remember the auction high yield of 1.503%, it could be our mean reversal level for the next few days. The caution flag for equities gets raised should ZN move back above 132’120.
Continue Reading -->The Morning Hammer: Famous Last Words?
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! Crude oil poked its head above $45 in early trading, which is giving emerging markets a pop today. China is ripping on a report saying that an exchange link between Shenzen and Hong Kong will be announced shortly, as well as takeover speculation among property developers. The DAX is up 0.4%, putting it in the green on the year for the first time. European bonds are mostly flat. SPX futures are slightly green and showing very little volatility in early action, which means today could be our 26th straight day without a 1% move in the index. And unfortunately, the economic calendar is pretty light, with the Empire Manufacturing and NAHB Housing reports coming out. Neither is likely to make a big dent in the action. However, we may finally get some action with tomorrow’s heavy calendar (CPI, industrial production, housing starts, building permits), and Wednesday’s FOMC Meeting Minutes and crude oil inventories combo. On the deal front, Mid-America Apartment Communities (MAA) is buying Post Properties (PPS) for $3.9 billion to form a REIT giant. The CBOE equity put call ratio went out at 0.55, which is right around yearly lows. The ISE Sentiment Index hit 136 Friday (136 calls for every 100 puts). This implies some near-term complacency, but we’ve had near-term complacency for quite a while now and it hasn’t mattered. It still feels like folks are waiting for “something” to happen — a news event or a good-old fashioned breakdown/breakout — to bring some life back into the market. It feels like it’s in the wings, but since so many people are thinking it, maybe we don’t get it soon. But seriously, 25 days without a 1% move? That can’t last forever. Famous last words?
Continue Reading -->Scott Redler’s Chart Attack: AAPL, BABA, NFLX
Want to Start Earning Bigger, More Consistent Profits? Dave Green can show you how! Check out the charts below of AAPL, BABA, and NFLX with my analysis. AAPL: See if it can hold $107.50 for a move above last week’s highs to $110-$112 resistance. BABA: Gave us a nice pre-earnings trade noth of $85 and a better options play into earnings. NFLX: Has been lagging but we saw some insider buyers. The pattern is tight and if it can clear $97-$97.75 with authority, maybe there is a trade back to $101, then $105ish. I’d use $94 as a stop. Disclosure: Scott J. Redler is long AAPL and NFLX
Continue Reading -->Scott Redler’s Morning Call Express: Summer Grind
In today’s Morning Call Express, T3 Live Chief Strategic Officer breaks down the action in FXI, EWG, and SPX, as well as individual stocks like AAPL and BABA.
Continue Reading -->T3’s Take 3: Oil Moves, and That’s About It. Seriously.
Did you miss Dave Green’s webinar last night? Click here to check out a replay. By Michael Comeau 1) Lousy, Lousy, Lousy Numbers US economic data missed across the board today: -Retail sales were flat in July vs. consensus of +0.4% -PPI was -0.4% vs. consensus of +0.1% -U. of Michigan Sentiment for August was 90.4 vs. 91.5 consensus Let’s dive in and look at the trend: The Citi US Economic Surprise Index has surged this year — especially after the June 24 Brexit. This indicates that economic data was beating expectations However, it started diving with the weak July 29 GDP report. So while one day of weak numbers isn’t worth getting excited over, the trend is indeed turning down and should be watched. 2) YAWN… US stocks put in yet another remarkably boring low-volatility day. The S&P 500 traded in a very tight 7-point range before finishing -0.1% at 2184.05. The Nasdaq and Russell 2000 also barely moved. The real action today was in crude oil, which rose 2.7% to $44.65 after Saudi Arabia’s energy minister said OPEC may act to prop up the oil market. We also saw a nice intra-day rebound in biotechnology and pharmaceutical stocks, which slumped yesterday. The VIX dropped again today to reflect the lackluster action, though not everyone thinks that condition will last… 3) Jeff Cooper’s Volatility Play This afternoon, T3 Live’s Jeff Cooper initiated a long trade in UVXY from $21.14: An hourly SPX from 8/8 shows a possible Megaphone Top pattern on the hourlies. The index is trying to stabilize at its 50 period on the hourlies here, but if it falters before the bell the Megaphone pattern will be triggered. While this is a very short-term pattern, bull markets in a Friday (particularly summer Fridays) like to close at/near session highs so a meaningful extension to the downside before the close could indicate a reaction is on the table next week. Let’s initiate a PILOT long in UVXY, which is a leveraged volatility play. Timed correctly, UVXY is very explosive. But keep in mind this is a very volatile vehicle and may not be for everyone. Last August it went from $130 to $450 in 9 trading days. Click here for more information on Jeff Cooper’s Daily Market Report Monday’s Trading Preview US Economics (Time Zone: EDT) 08:30 Empire Manufacturing (Aug): exp. 2, prior 0.55 10:00 NAHB Housing Market Index (Aug): exp. 60, prior 59 16:00 Total Net TIC Flows (Jun): prior -$11.0b 16:00 Net Long-term TIC Flows (Jun): prior $41.1b Global Economics Sunday 19:50 JPY GDP Monday 00:30 JPY Industrial Production 09:00 CAD Existing Home Sales 21:30 AUD RBA Aug. Meeting Minutes Earnings Before the Open: 500.com (WBAI) After the Close: Fabrinet (FN) Vipshop Holdings (VIPS) Sysco (SYY)
Continue Reading -->Economic Data Stinks. Does It Matter?
So far this morning, US economic data has missed across the board: -Retail sales were flat in July vs. consensus of +0.4% -PPI was -0.4% vs. consensus of +0.1% -U. of Michigan Sentiment for August was 90.4 vs. 91.5 consensus There is often a major disconnect between economic data and stock prices, but let’s dive in anyway. Individual economic data points are not very important. They may have a short-term impact, but trends are what really matter for markets (and central banks for that matter.) The trend is what really matters. So let’s look at the trend. The Citi US Economic Surprise Index has surged this year — especially after the June 24 Brexit: However, it took a big hit on the weak July 29 GDP report, and this recent streak of mixed data may be hurting the trend. And now, perception of the Fed (which is way more important than what the Fed actually does), is shifting back towards dove territory. Fed funds futures now indicate a 39% chance of a December rate hike, down from 47% last week. This is giving the big G.U.T.S. trade (gold, utilities, Treasuries, silver) quite a revival. And we are seeing weakness in banks, particularly the regionals (KRE). That means the numbers are on the verge of starting to matter. But this is just a start — follow-through is what matters. If the banks really start faltering and the G.U.T.S. trade takes on new life, then the data may in fact mean something. Let’s not get excited until things get exciting.
Continue Reading -->The Morning Hammer: Another Day, Another Record, Another Yawn
Yesterday, the S&P, Dow, and Nasdaq all made new record highs as the most boring bull market ever just kept on chugging. The S&P has now gone 24 days without a 1% move. Bulls obviously won’t argue with the results. Bears are sweating like crazy because they’re playing the “what goes up must come down” game. But sometimes, what goes up stays up much longer than seems reasonable. It’s been an especially bad month for traders buying puts, because there’s nothing worse than a slow grind up with declining volatility — you just get eaten alive a penny at a time. Getting wiped out in a spike high is actually better because at least you know it’s over and you can move on. That said, I am long VIX calls, which means I’m speculating on a significant volatility spike. I may have gotten into this trade a little early, but I still believe the odds are on my side. Overnight, Euro-area GDP came in as expected, though Italy’s was weak. The UK also reported weaker-than-expected construction spending in June. So while economic data around the Brexit was actually generally decent relative to expectations, it’s now falling off a little bit. This lends some credence to the Bank of England’s massive reduction in its GDP forecasts. And China’s factory output, retail sales, and fixed-asset investment all missed expectations. Today, SPX futures are flat as an ironing board, and there’s not much movement elsewhere. The dollar’s flat, commodities aren’t doing anything dramatic, and European stocks and bonds are roughly flat. There’s some movement in Europe, but overall, the world is falling asleep. Sentiment is still somewhat bullish, as judging by the steep VIX curve, Investors Intelligence Survey, and CBOE equity put-call. Permabears are saying everyone’s complacent, but I wouldn’t go that far. I’d say we’re at about a 7/10 in terms of crowd bullishness. (with 10 out of 10 being psychotically bullish) On today’s calendar, we’ve got retail sales, PPI, U. of Michigan Sentiment, and the Baker Hughes Rig Count. Maybe retail sales can shake things up a little bit. JC Penney (JCP) just reported a small sales miss, which is a little disappointing after the beats from Macy’s (MC) and Kohl’s (KSS) yesterday. I’d watch the usual suspects today — oil, biotech, small caps, and high-yield. These are the key attack areas for the bears if they’re ready to rock. Good luck friends.
Continue Reading -->T3’s Take 3: Strong Oil Means More Bull Action
1) Crude Oil Booms Crude oil surged over $43 today in an extension of the rally off the August 2 lows. Saudi Arabia’s energy minister said that next month’s OPEC meeting in Algiers could include plans to stabilize the oil market. Plus, the International Energy Agency said that demand from refiners will help the global oil market rebalance this year, which quieted fears about record oil production in Saudi Arabia and other OPEC nations. This news had traders forgetting about this week’s bearish US oil inventory reports, and energy stocks rallied with a vengeance today, with oil service names especially strong. The Vaneck Vectors Oil Services ETF (OIH) rose 1.4% to $28.51 today. 2) Stocks Bounce Stocks responded well to the oil price surge, and the S&P 500 rose 0.5% to 2185.79, setting an all-time intraday high at 2188.14 The solid stock action had the VIX continuing its dip from yesterday’s 12.50 intraday high. Retail stocks got a nice bump on strong earnings from Macy’s (M) andKohl’s (KSS), while biotechnology (IBB) rebounded from a weak open to rise 1.1% to $291.91. The US dollar and Treasury yields rose today, putting pressure on bonds, and the real estate and utility stocks. 3) Jeff Cooper on the SPX This morning, my buddy Jeff Cooper issued a report with in-depth analysis of the SPX, saying the following: The SPX is either topping just below 2200 or is going to run to 2290 ish into the end of August/early September. Youse puts up ya money, yousetakes ya chances. Although the market does its diabolical best to misdirect players, it should be easy to see which one once Mr. Market shows its hand –probably over the next 2 to 3 days. We have had two quick downdrafts since last August. I suspect there could be 2 to 3 air pockets between August and October if the above Gann symmetry plays out — despite The Hand unleashing a swarm of V’s since last summer. Click here for the full report Friday’s Trading Calendar US Economics (Time Zone: EDT) 08:30 Retail Sales Advance MoM (Jul): exp. 0.40% , prior 0.60% 08:30 Retail Sales Ex Auto MoM (Jul): exp. 0.10% , prior 0.70% 08:30 Retail Sales Ex Auto and Gas (Jul): exp. 0.30% , prior 0.70% 08:30 Retail Sales Control Group (Jul): exp. 0.30% , prior 0.50% 08:30 PPI Final Demand MoM (Jul): exp. 0.10% , prior 0.50% 08:30 PPI Ex Food and Energy MoM (Jul): exp. 0.20% , prior 0.40% 08:30 PPI Ex Food, Energy, Trade MoM (Jul): exp. 0.20% , prior 0.30% 08:30 PPI Final Demand YoY (Jul): exp. 0.20% , prior 0.30% 08:30 PPI Ex Food and Energy YoY (Jul): exp. 1.20% , prior 1.30% 08:30 PPI Ex Food, Energy, Trade YoY (Jul): exp. , prior 0.90% 10:00 Business Inventories (Jun): exp. 0.10% , prior 0.20% 10:00 U. of Mich. Sentiment (Aug P): exp. 91.5 , prior 90 10:00 U. of Mich. Current Conditions (Aug P): exp. 109.5 , prior 109 10:00 U. of Mich. Expectations (Aug P): exp. 80 , prior 77.8 10:00 U. of Mich. 1 Yr Inflation (Aug P): prior 2.70% 10:00 U. of Mich. 5-10 Yr Inflation (Aug P): prior 2.60% 13:00 Baker Hughes U.S. Rig Count (8/12): prior 464 13:00 Baker Hughes U.S. Rotary Gas Rigs (8/12): prior 81 13:00 Baker Hughes U.S. Rotary Oil Rigs (8/12): prior 381 Global Economics 02:00 EUR German Prelim GDP q/q 05:00 Flash GDP q/q Earnings Before the Open: J C Penny Co. (JCP) After the Close: None of significance
Continue Reading -->Crude Oil Goes Boom… and 4 Other Thoughts on Today’s Action
Attention! This afternoon, T3 Live’s Dave Green is hosting a FREE trading webinar. Click here to learn how Dave crushes the market! 1) Crude Rips Crude oil is slamming above $43 on an International Energy Agency report saying the market will continue to rebalance as demand from refiners grow. Predictably, energy stocks (especially oil service names) are doing great work on the upside, and it’s also pulling up high-yield (HYG). The bull run off post-Brexit lows may ‘feel’ long in the tooth, but strong crude oil could help extend it. 2) If You’re a True Believer… If you think oil’s going to continue running higher, look at energy closed-end funds. They are still showing large discounts, which could close if oil prices rise. Names to watch include KMF, KYE, and GMZ. 3) ANOTHER Record High? Assuming crude oil can keep moving higher, SPX may be in for yet another record high today. A colleague commented today that since the market’s so high, it’s probably destined to crash soon. I’m technically short the market, but I fully understand the reality on the ground: what goes up must come down — but before it comes down, it may go up. A lot. 4) Still No Vol The VIX had a 13% spike from Tuesday’s low to Wednesday’s high, but it’s round-tripped most of the move. I popped in a daily chart of the VIX vs. 20-day realized volatility on the SPX: Both are at yearly lows as the sideways grind continues. Unless something drastic happens, we’re going on 24 days without a 1% move. I really should have gone on vacation this week because the action is so boring! 5) Bio-Blah Biotech is up a little but it’s still showing pretty anemic action overall. It’s partly good old-fashioned consolidation after a big run higher, but it could also be a sign of exhaustion. If IBB starts surging towards $300, I imagine it would give the bears quite a scare. Click here to check out Dave Green’s webinar today!
Continue Reading -->