This is based on price-action, news, and unusual options activity. No particular order…just names I think will move. The link below is for those of you with Ameritrade’s ThinkOrSwim…you can just click it and add it.
These names have my interest piqued for the trading day ahead. While I do still see the market internals continue to weaken, it just means you have to be faster about taking out some profit if it’s a shorter trade. My buddy over in my trading room (sup binks)…has the sort of patience you need with the long(er)-ish options depending on how far down they fall. That and the odds of them coming down against you/us/any trader in a manner that makes the more emotional in us come out. But we’d always been so good in the past at a certain strategy.
Try to remember that markets dynamics are the keys here…this would be a great time to preach Soros and Reflexivity (his Alchemy of Finance is one of the best investing books ever written. I’ve read it more than once because it’s practical yet more lucid than the heavy theoretical econ books. You know, the big ones any of you finance majors used to lug around that taught you efficient market hypothesis was real.
If you haven’t noticed yet (about the EMH fallacies). Here’s a brief concept of Soros and Reflexivity….I do want to write something longform about this soon…but you guys are here for the picks right? :-p
All this has changed as a result of the financial crisis of 2008. My conceptual framework enabled me both to anticipate the crisis and to deal with it when it finally struck. It has also enabled me to explain and predict events better than most others. This has changed my own evaluation and that of many others. My philosophy is no longer a personal matter; it deserves to be taken seriously as a possible contribution to our understanding of reality. That is what has prompted me to give this series of lectures.
So here it goes. Today I shall explain the concepts of fallibility and reflexivity in general terms. Tomorrow I shall apply them to the financial markets and after that, to politics. That will also bring in the concept of open society. In the fourth lecture I shall explore the difference between market values and moral values, and in the fifth I shall offer some predictions and prescriptions for the present moment in history.
I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity. For instance, treating drug addicts as criminals creates criminal behavior. It misconstrues the problem and interferes with the proper treatment of addicts. As another example, declaring that government is bad tends to make for bad government.– George Soros
[source: https://www.ft.com/content/0ca06172-bfe9-11de-aed2-00144feab49a ]
With that said here’s what I’ve got watchlisted for the day (already in some).
- $PCG – Huge order of aggressive Calls bought towards EOD
- Massive block trade of $CRM; keep an eye out.
- $SPY money flow was negative but $IVV was amongst the strongest in the market yesterday in money flow accumulation. Which makes to sense.
- It’s a holiday weekend, I wouldn’t expect too much volume so don’t go crazy with adding to your portfolios today. I think the market will go up on a drive by crude. I’m going to assume Baker Hughes drops the active rig count.
- I say that because some of the most bullish options flow was into the some energy names towards the end of the day.
- The banks that were flat and coy for most of the day yesterday all ended on strong buy volume. So watch $XLF today as well.
- I do think bonds haven’t turned bearish again anything…that’s why i bought an equity starter in $TMF yesterday.
- Other Names of Interest: $JD $TSLA [+.55 premarket presently]..LGF.A [+.28] $GE [+.06]
- $AAPL was up way higher but is being brought down now, which a likely explanation as to why the markets as aa whole just came down.
- In this environment you don’t want to be selling volatility yet. Things are too frail.
- Something is up with $AFSI … big order in the name was cancelled at then replaced for a lower fill…which makes me want to think that almost has to imply buy activity.
- $MU had large block orders yesterday as well as money flow accumulation; $NVDA did also.
- $PBR [careful there though]
Watchlist ’em; let’s see what happens. Per the norm I’ll keep you up to date as we go in the room or on StockTwits.
In-terms of trend shifts; almost all of the bonds are flashing buy signals. $TLT I like there; but as mentioned I took $TMF instead yesterday.
Gold – Short-term but flashing some buy signals.
Silver – Bullish [$SLV or $AGQ]
New [or sustainted] Bullish Equity Signals: $R $NI $CNP $SYMC $COTY
ETFs: Still bullish $TUR and own it. Considering $YANG
Bearish Equity Signals: $BAC $BBY $CTL $REX $TGI
Yeah that should be enough for a watchlist for today I think. I actually made one for those of you with TOS.. http://tos.mx/7oQnbO
Today in History: Star Wars was released on May 25th, 1977. May the force be with you.’
Yesterday’s markets followed more or less as what was to be expected.
That whole rhythm of the market thing.
Know why chart patterns exist? Sequences recur.
Some don’t, but the fact that some do is the fundamental basis of patterns. Be they chart patterns or otherwise. Candlestick patterns are still a very popular tool amongst chartists because those patterns are the sequences that recur the most.
And, frankly, it seems like these patterns haven’t changed much or you wouldn’t see them on any chart you can name.
Unlike nature, the Golden Mean/Fibonacci Spirals [where the Fibonacci levels come from in charting], markets don’t stick to those levels or follow them perfectly. That’s why they’re called levels in the market.
Nothing can be certain.
What To Look For Today
With that said….I think we’re going see a kinda choppy morning but an overall bullish day, with some very strong slopes up.
- -I expect $VIX to gradually chop up. Don’t forget markets can go up as $VIX does.
- As of 6:50 AM, S&P 500 Futures are trading -4.25 @ 2718.75. They’re moving up on good numbers from $WMT. Oh, now it’s 10 minutes later and I checked before posting and now $WMT trading down. Haven’t read the E.R. yet.]
- There are three big numbers out today. The Philly Fed Manufacturing Index and the initial jobless claims data come [email protected] 8:30 AM EST | Analysts are expecting solid numbers there. The third is Natural Gas Storage at 10:30 AM. If markets need another kicker after morning chop that could be it. Or it very well could start the chop. Let’s see.
- Trend-wise remain bullish on SPX watch 2680ish as a reversal to get scared about.
- Bio-techs look stronger.
- Airlines look stronger.
- Other names I’m watching today for entries/averages on.
- The trend isn’t broken.
- I noticed way more equity blocks going through than usual vs. big opening options positions. The skeptic in me wants to say that we go up today but on low volume due to that sort of action.
- One caveat; Yesterday the 30-year note briefly broke its present resistance but pulled back quickly. If you asked me, I’d say that it was probably some of a Fed taper sale. The Fed is going to want to sell bonds high, ya know. So while that bond trade happened it might not be so important…today anyway.
Sorry for not posting this last night….hence the improper date. I’ll do one tonight. At the right date
Over the past two days, headlines have been flooding my newsfeed regarding Amazon’s decision to…wait for it…wait for it….RAISE THE PRICE OF AMAZON PRIME!
Oh no! Say it ain’t so, Bezos. Say it ain’t so.
The equity markets, despite a strong move up yesterday, are continuing to show signs of weakness.
As I noted in my last post, the technicals point towards some downside in the near future.
Geopolitical tensions and the whirlwind of news around the implications of these things have shoved the market violently in both directions.
Crude is pretty much running the show in terms of carrying/propping up the Dow and the S&P.
Tech looks pretty weak here and financials seem to be weakening a bit as well.
Things to Keep In Mind Today
- – Initial Claims for Unemployment was slightly higher than expected; not much to note.
- – The Philly Fed Manufacturing Activity Beat Expectations by a decent margin.
Those numbers were reported 30 minutes ago, the initial reaction was a jerk up on the indices which have since retreated. I think we push up from here into the open.
I took a look at the past few Thursdays and they all have very similar pattern…though with monthly options expiry, today could be different. That said, the pattern has been upward momentum into the open, a quick bear jerk down then a slow ascension through the day followed by selling at the end of the day that’s caught by some bullish order flow into the close.
- – $VIX had a very bullish day of options trades yesterday.
- – Most of the aggressive short-term bull plays yesterday were out to next Friday rather than this Friday, implying traders in most equity sectors are trading around a move lower today or tomorrow for the broader markets.
Some of my favorite unusual options activity from yesterday worth watching include…
- – Bearish trades against several chip manufacturers…namely $INTC and $MU
- – $QQQ MAY18 $150 Ps @ ASK
- – $IWM MAY18 $165 Cs Swept @ ASK + Opening
- – $YNDX MAY18 $40 Cs Swept Above ASK
- – $SN MAY18 $5 Cs
- – $$BEN MAY18 $37 Cs @ .05 ASK
- – $SPY 25APR18 $280 Cs @ .07 ASK
- – $VIX MAY18 $26 Cs
Watch markets at 10:30 AM [EST] for the Natural Gas Inventories numbers to decide the next direction of the major indices.
Keep an eye on the 10-year Treasury Notes and Gold as well, they’re both about testing pretty critical resistance levels.
Today In History
The first Boston Marathon was held 121 years ago today and was won by John J. McDermott. Investing should never be a sprint, particularly in these market conditions. McDermott had the right idea.
Tesla shares slid hard this week.
While Puts would’ve been an easy enough trade, I didn’t take them because we’ve been here before with this stock. Quite literally.
I’ve ridden this stock up a few times now for some major gains. But the turn-around points tend to be harsh and immediate, so the loss of value on Puts can be quick.
The year is 2013…
The futures are slightly in the green territory as of now…but they’re fairly flat. [S&P +3.00 Nasdaq +6.00 Dow +59.00]
- Economic data this morning was decent; nothing warranting a real heavy push
- News cycle seems to be pushing the tech sector up, with $BABA offering on the Chinese Market being reannounced today and several Chinese companies receiving upgrades today. Beyond Ali-Baba, $BIDU $YRD and $JD are also up pre-market. You might want to try to catch upside on these via $FXI…or for individual names $BABA and $BIDU should be the leaders of the pack today.
- Notable upgrades & earnings out include:
- $FDX Maintained at Outperform and PT Raised to $280
- $ASUR Reports record 4th quarter & raises guidance
- $AVGO PT announced at $340 by BAC
- $QRVO Cut to Underperform from Neutral by BAC
- $NTNX PT Raised to $58 [from $45] at Raymond James
- $ZION upgraded to outperform from market perform at Raymond James
- Notable News from a report on The Video Ad-Sector says the industry has seen a 31% drop in fraud rate. This should move bode well for $GOOG $FB $TWTR $SNAP & $TTD amongst others
As for the trading the market today…be careful with monthly options expiring tomorrow. Typically, to play on retail sentiment, they’ll drive the market up at open, let it fade and idle for a while, then start buying to build bullish sentiment into the close. That might not happen today, but it’s something to watch for.
If you have any short-dated bullish options positions, I’d consider taking some profit off if the day goes as stated above…let’s wait and see.
My favorite options flow from yesterday include:
- $S has been the subject of lots M&A speculation since announcing interest in such a deal.
- $TMUS and $CHTR have been the primary targets mentioned in mainstream stories, but neither makes sense.
- $ERIC may be the true target and mainstream financial news may have slipped with a tip-off.
- Timeline of news on $ERIC vs that of $S is oddly fitting
Sprint ($S), a telecommunications company of which Softbank ($SFTBY) owns 80% of, has been in and out news cycles about a possible merger or acquisition for most of the year.
This years’ hype began on February 17th, 2017, when Reuters reported that Softbank was looking to sell their equity in Sprint to Deutsche Telekom, the parent company of $TMUS.