Welcome Stockaholics to the trading week of September 19th! This past week saw the following moves in the S&P: Major Indices End of Week: N/A. Bird's Eye view of the Major Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Ascena Retail Tuesday 2-day FOMC meeting begins Earnings: Lennar, FedEx, KB Home, Adobe Systems 8:30 a.m. Housing starts 8:30 a.m. Building permits Wednesday Earnings: General Mills, Red Hat, CarMax, Bed Bath & Beyond 2 p.m. FOMC meeting statement and economic projections 2:30 p.m. Fed Chair Janet Yellen press conference Thursday Earnings: AutoZone, Rite Aid 8:30 a.m. Initial claims 9 a.m. FHFA home prices 10 a.m. Existing home sales 10 a.m. Leading index Friday Earnings: Finish Line 9:45 a.m. Manufacturing PMI 12 p.m. Philadelphia Fed President Patrick Harker, Atlanta Fed President Dennis Lockhart and Cleveland Fed President Loretta Mester on reinventing communities, transforming economies 12:30 p.m. Dallas Fed President Rob Kaplan speaks at energy forum
VIXtermination Trumps Deutsche Damage, Dismal Data; But Stocks End Week Weak After that week, this seemed appropriate... Macro data has fallen 5 of the last 6 weeks... Despite desperate efforts to ramp stocks intro the quad witching close, major indices ended the day red... VIX crush is losing its mojo... On the week, stocks closed green (despite weakness today)... Dow futures swung around 200 points on the week to end practically unch... Post-Rosengren, everything is lower (USD higher) with the least worst being the long-bond... Of course it was AAPL that saved the world this week....massively outperforming after dropping following the iPhone 7 farce... The only thing that mattered this week... The biggest headlines this week were in bond land but today's moves erased much of the record-breaking panic-mongering (with 30Y outperforming 2Y today)... 2s30s steepened on the week but flattened dramaticlaly today after tagging Brexit highs... On the week Yen strengthened (against the USD) most but the USD Index gained notbaly led by weakness in EUR and GBP... Cable -1.9% this week - worst week since Brexit (and -1.6% today - worst day since Brexit) - thanks to comments on Article 50 being triggered in Jan/Feb Commodities were very mixed on the week - PMs drifted lower as USD strengthened, but Copper soared as Crude got clubbed... Big moves... WTI -6.5% this week - worst week since January Copper +3.2% this week - best week in 2 months Charts: Bloomberg
Spoiler: Weekend Reading: Volatility Returns With A Vengeance Submitted by Lance Roberts via RealInvestmentAdvice.com, Ironically, last week I titled the reading list “Market Stasis” with respect to the 43-days of sideways market action with relatively minor price fluctuations. That publication marked the respective end of that complacency. This past week has been anything but complacent as the volume in volatility trades have exploded simultaneously with wild swings in market price from spectacular declines to surging rebounds. This corrective action, which I have warned about repeatedly over the last month (see here) may be different than the standard“buy the dip” correction. The market has already violated both initial supports (the bull trend line and previous highs) which brings into focus the bull trend support line from the February lows. A violation of the latter will likely see the markets retest the 2020 level on the S&P 500. One thing the sell off this week showed investors is what happens when correlations across asset classes become extremely high. When the selling begins, there is no “safe place” to hide. As my partner, Michael Lebowitz, noted earlier this week: “The truth of the matter is that blind diversification does not work simply because it does not take into account the effects of volatility on asset prices. Chris Cole from Artemis Capital, one of the clearest thinkers on the importance of volatility as an asset class, highlights this point in the following graphic.” “Contrasting the perception of a well-diversified portfolio with the reality of embedded volatility, the graph reflects enormous concentration risk in short volatility. Importantly, this risk matters most at the exact point in time when one expects – hopes – their strategy of diversification will protect them. Unfortunately, the well-diversified portfolio (left side) turns into the short volatility-concentrated portfolio in periods of extreme market disruption. Mr. Cole’s analysis may be best summarized with the popular statement that correlations on many assets go to one during a crisis.” Let’s put it this way. If you didn’t like what happened to your portfolio this week during a mere 3% decline from recent peaks, just imagine what you will be feeling when a correction of some magnitude eventually occurs. It is at this point, when individuals stare into the “abyss,” the realization of the “risk” they have undertaken becomes most apparent. It is also when the mantra of “I bought it for the dividend” changes to religion as the prayers are lofted for a “bounce to get out.” This is why I focus on risk and the inherent management of it. The returns will take care of themselves. But, in the meantime, here is what I am reading this weekend. Fed / Economy It Only Looks Like The Good Life by Danielle DiMartino-Booth via Money Strong If The Fed Had GPS, No Need For Forward Guidance by Caroline Baum via MarketWatch The Age Of Stagfusion by Buttonwood via The Economist Harvard University Crushes Obama’s Recovery Story by Tyler Durden via Zerohedge Economic Growth Level Is Unacceptable by John Engler via CNBC The Scale Of Wholesale Economic Loss by Jeffrey Snider via Alhambra Partners Ray Dalio: Fed Doesn’t Need To Raise Rates by Jen Wieczner via Fortune Recession Risk Moves Higher by Douglas McIntyre via 24/7 Wall Street CB’s Will Push Dow To 100,000 by Marc Faber via Epoch Times Fed Is Planning Another SLOW Recovery by Narayana Kocherlakota via Bloomberg Markets This Market Sell-Off May Be Different by Mohamed El-Erian via Bloomberg Deutsche Says 35-year Bond Rally Is Over by William Watts via MarketWatch Surging Bond Yields Are Dangerous by A. Evans-Pritchard via The Telegraph No Bear, Buy Stocks Instead by John Tobey via Forbes 8-Sources Of Market Stress Ahead by Rob Isbitts via MarketWatch Is The September Swoon Already Over by Paul La Monica via CNN Money The Bull Is Still Running by Paul Lim via NY Times This Is Nuts, Get Used To It by David Keohane via FT Alphaville Pattern Signals A Potential 25% Plunge In Stocks by Barbara Kollmeyer via MarketWatch Bond Market Will End Badly by Brett Arends via MarketWatch Investors Have No Place Hide by Nigam Arora via MarketWatch More Pain For Stocks To Come by Michael Kahn via Barron’s Last Time This Happened, Stocks Crashed by Tyler Durden via ZeroHedge Sell In September Or Get Dismembered by Doug Kass via The Street VIX Says Things Are About To Get Ugly by Mark DeCambre via MarketWatch Interesting Reads Elizabeth Warren Has 5-More Bad Ideas by Paula Dwyer via Bloomberg NFL’s Most Valuable Teams by Mike Ozanian via Forbes Longest Bull Market Ever by Meb Faber via Faber Research 46 Reasons Why This Is A Great Time To Be Alive by Morgan Housel via Tumblr 97% Of S.S. Recipients Are Doing It Wrong by William Baldwin via Forbes Why Universities Are Failing by Preston Cooper via FEE America’s Inequality Problem by Eduardo Porter via NY Times Justify Your Smart Beta Methodology by Rob Arnott & Chris Brightman via ETF.com Oil Crash Worse Than Dot.com Bust by Value Walk via Financial Sense Party Like It’s 1999 (and 1929) by John Hussman via Hussman Funds The Real Brainard Bloodbath Beckons by David Stockman via Contra Corner How 1 Is Greater Than 40 by Dana Lyons via Tumblr Central Bankers & Einstein’s Theory Of Insanity by Jesse Felder via The Felder Report “A fool and his money are lucky enough to get together in the first place.” — Gordon Gekko (Michael Douglas) Wall Street
Market Pattern Setup for a Fall Correction So I guess that’s the end of our low volatility period. As we pointed out last week the end of lengthy streaks of low volatility can be damaging to market performance. After not having an S&P 500 daily move greater than +/- 1% for 43 trading days since July 8th, we have had 4 in the last 5 days. This recent volatility is highlighted in the yellow oval in the chart below of the Three Peaks and a Domed House Top pattern (3PDH) we have been tracking since June, which was re-plotted a month later in July. Previous clusters of this sort of volatility on the chart are associated with corrections. I am not convinced we will get all the way back to the 3PDH Separating Decline low at points 10-14 at this juncture, but the Brexit lows could be in play over the next several weeks. Click here to view image full size… ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- S&P 500 down 22 of 26 during week after September options expiration, average loss 1.08% Consistent with a rise in volatility in September, the week after options expiration week, next week, has a dreadful history of declines especially since 1990. The week after September options expiration week has been a nearly constant source of pain with only a few meaningful exceptions over the past 26 years. Substantial and across the board gains have occurred just three times: 1998, 2002 and 2010 while many more weeks were hit with sizable losses. Full stats are in the following sea-of-red table. Average losses since 1990 are even worse; DJIA –1.15%, S&P 500 –1.08%, NASDAQ –1.07% and a whopping –1.65% for Russell 2000. End-of-Q3 portfolio restructuring is the most likely explanation for this trend as managers trim summer losers and position for the fourth quarter.
Stockaholics come join us in our weekly market poll as well our stock picking contests for this upcoming week ahead! Stockaholics Weekly Big Board Contest & SPX Sentiment Poll for the Week of (9/19-9/23) <-- click there! In addition we have a brand new daily market poll and stock pick challenge for Monday- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for (9/19) <-- click there! It would be awesome to see all of you regulars here at Stockaholics join in and participate on these polls & contests... Hope you all have a great weekend!
ShadowTrader Video Weekly 9.18.16 - Nasdaq Strength, $BABA update, $PCLN, $ULTA, $LC, $TWLO Video from ShadowTrader Peter Reznicek
TWLO, ive been selling weekly calls againt my position, i might hold off on doing that this week, could be a really wild ride come wednesday.
here is a quick peak at the major markets over the past couple of months and take a look at the bottom right chart in this 6 grid chart i have here ... it looks like the dollar index is attempting to break out of that symmetrical triangle pattern there and stopping right on the daily 200 sma ... is it for real? i guess we find out for sure after this ccoming wednesday! stay tuned lol
ER in this upcoming week ahead: $ADBE $FDX $LEN $AZO $RAD $KMX $BBBY $GIS $KBH $ASNA $RHT $FINL $LITB $IKGH
A financial war just broke out between the United States and Europe. Two weeks ago, Europe demanding that Apple Inc.(NASDAQ:AAPL) pay $14.5 billion in back taxes. Today, the U.S. Department of Justice levied a $14 billion fine on Deutsche Bank AG (NYSEB). This is financial war at its finest. The United States is saying, if you attack our biggest and best company, we will attack your biggest bank. This is how wars are fought. Sactions on Russia, cyber hacking from China. Considering the world economy is a mess, having two super powers at financial war is probably not the best thing for its citizens. This promises to be full of fireworks in the next few months. Stay tuned. By Pro-Trader Jenny Rebekka
So I just chatted with our esteemed leader @Gil Oren and he tells me that he is now on the road coming back home from his week's summer trip in nyc and should be arriving back sometime later this evening! Let us know once you're back home safe and sound SJ-e! We all miss you greatly!!
Sept 16th - 23rd 2016 Market Wrap and Sector Watch We have a few sectors bucking the trend but the Bears can still take control It's all about the FED
I hope Gil is well rested and ready to deal with the markets these next few weeks. Maybe Trump will start to surge in the polls and this will cause a market semi crash, or correction. I just need about 3 more weeks, people! Let's keep that market up for about 3 more weeks. Then I'll get back into the swing of things, probably start making video's on selling option premium in liquid markets.
IM BACK!! Hi guys! Rested? No, I need more sleep than ever. That drive from NYC down to NC is tiring! If Trump starts leading the polls then I full expect this market to start freaking out. This is going to be a very entertaining and interesting election cycle!
Can someone who understands pairs trading tell me what it's called when you look for opposing pairs? That is, something that goes down when the other thing goes up and something that goes up when the other thing goes down? Is there a name for that in financial markets? When I search for pairs trading, it's always equities that move together. I'm looking for equities, or ETF's, or something, that moves opposite to one another, like a mirror image. Thanks!
Doing a lot of research tonight, I've discovered that what I'm really looking for is a correlation scanner. I've found a few, but for the most part, they just track the correlation of an equity, like AAPL, to an ETF. Like this one: http://www.sectorspdr.com/sectorspdr/tools/correlation-tracker But, that's not what I need. I want a tool that will let me put in AAPL and search for another stock that is negatively correlated to AAPL, assuming one exists. Does anyone know of such a tool? Thanks!
Its a form of mirror trading, which is what got Deutsche Bank in trouble in these latter stages. I don't know if there is a name for it specifically, maybe there is and I am not immersed in the parlay, but I would run a regression (after running a scan) and look for names that are negatively correlated. The closer the correlation is to -1, the higher the reliability. TradeStation allows you to correlate multiple instruments simultaneously. But as a piece of advice, for what its worth, I would not just focus on price. You have to look at some of the Greeks such as Beta and Alpha and cross-reference these int your findings. Its of little use to pick two assets that move inverse to one another and have vastly different beta and/or alpha coefficients.
Good Monday morning Stockaholics! Spoiler: Monday September 19th 2016 Pre-Market Stock Movers & News Good morning Stockaholics! Happy Monday! Frontrunning: September 19 Global Stocks Rise, Buoyed by Commodities (WSJ) For Yellen, a September Fed surprise could close confidence gap (Reuters) Robot detonates New Jersey device in latest bomb discovery (Reuters) Syria Truce Hangs in Balance Amid Attacks, Lack of Aid (WSJ) Merkel’s Party Suffers Worst Berlin Loss of Postwar Era (BBG) China’s Home Prices Rise Most in Six Years as Sales Gain (BBG) More than a week after ZH, the FT asks: "Will the Bank of Japan cause a global bond tantrum" Yuan Interbank Rate Surges in Hong Kong in Sign of Intervention (BBG) Oil climbs as Venezuela sees output deal (Reuters) Libya Clashes Halt First Oil Cargo From Ras Lanuf Since 2014 (BBG) Fed Hits Crossroads on Inflation Policy (WSJ) Pimco, BlackRock See December Fed Hike Amid Mini Taper Tantrum (BBG) Five Days of Gridlock: Your Guide to UN General Assembly Week (BBG) Tesla Wins Massive Contract to Help Power the California Grid (BBG) European banks represent the world's biggest contrarian trade (Reuters) Banks Are Now too Scared to Even Make Money (WSJ) How EBay's CEO Plans to Take On Amazon (BBG) STOCK FUTURES NOW: FRIDAY'S MARKET MAP: TODAY'S ECONOMIC CALENDAR: MOST ACTIVE TRENDING PRE-MARKET DISCUSSIONS (SYMBOLS ARE CLICKABLE!): GPRO BLOX EVBG X GM XLE ISLE WFC LNG CYH HLTH WNR LMT VIA.B LDOS CLI XOM BABA ACAD BA USLV WBA UNG XLF PYPL TODAY'S EARNINGS CALENDAR: THIS MORNING'S PRE-MARKET NEWS MOVERS: MCD, VIAB, PYPL, WFC, GM, KBR, ISLE & more source: cnbc.com McDonald's — The Financial Times reported the fast-food giant may be ordered to pay $500 million in back taxes to Luxembourg. McDonald's is being investigated by Brussels over a tax ruling which allowed the firm to pay no taxes in the U.S. or in Luxembourg. Viacom — Analysts at Stifel downgraded the media giant's stock to "hold" from "buy" and slashed their price target to $38 from $49, citing reports that Viacom's board has decided to halt plans to sell its minority stake in Paramount Pictures. "We had been holding the potential of a sale as one of the key anchors of our Buy rating as such a sale would have made the core Media assets despite the challenges appear under-valued," Stifel analysts said. PayPal — The online payment firm's stock was downgraded to "hold" from "buy" by Canaccord Genuity analysts. "We are optimistic regarding [total payment volume] growth in the near term, but we believe the factors driving this (One Touch, Venmo) are well understood and largely reflected in estimates," they said. The analysts also lowered their price target on PayPal shares to $40 from $45. Wells Fargo — The banking giant's stock was upgraded to "outperform" from "neutral" by analysts at Baird, citing an "attractive" risk/reward scenario. "Clearly, recent headlines surrounding retail banking sales practices at WFC are a black eye for a company with a great long-term fundamental track record. … However, we think pessimism in the stock is likely to peak over coming days, and find the market's extraction of ~$25B in WFC market value related to a $2.6M revenue loss to be excessive," Baird said. General Motors — Shares of GM rose more than 2 percent in premarket trading before the bell after analysts at Morgan Stanley upgraded the auto firm's stock to "overweight" from "equal-weight" and raised their price target to $37 from $29. "We believe GM´s businesses can remain relevant and profitable for longer than the market thinks. A move to Auto 2.0 requires a lengthy transition period (Auto 1.5) during which time GM can generate cash, return cash and nurture new businesses with potentially positive terminal values," Morgan Stanley analysts said in a note to clients. Isle of Capri Casinos — The hotel and casino operator's stock surged more than 30 percent in the premarket after announcing it's being bought out by Eldorado Resorts for $23 per share, or $1.7 billion, in a cash-and-stock deal. Eldorado's shares, meanwhile, advanced more than 8.5 percent. BWX Technologies — The firm announced an accelerated share repurchase program worth $200 million which will be funded through cash on hand and credit. BWX Technologies shares remained unchanged in the premarket. KBR — The company announced the acquisition of Honeywell Technology Solutions, a Honeywell subsidiary, as KBR expands its Global Services offerings "into higher end technical services that offer increased margins and a lower risk profile." The deal is expected to be accretive to KBR's profits in 2017. ITT Educational — The for-profit college company filed for Chapter 7 bankruptcy, according to a Securities and Exchange Commission filing. ITT Educational's shares were halted in the premarket. Good trading day to everyone in here on this Monday!
