After bleeding out the week before last (and the week before that), we finally got a nice move up last week.
Most of the bullish indices moves came on the back of Kudlow saying Trump was open to a deal with China. That and Federal Reserve Chairman Williams putting out a fairly ‘dovish’ stance on interest rate hikes and the state of the economy.
What we have seen is a big correction that is in the shape of reversing. Here’s a daily chart of the $SPY ($SPX / $ES_F / $SPX500 / S&P 500).
If you know of my “first candle indicator”, you’ll see that we are still in a bullish major trend. If you don’t know of it, I’d recommend you give it a read. It’s in two parts, but I’d read part two first here.
The G-20 Summaries So Far
A great deal of financial commentators said that they were concerned about the undertakings and takeaways of the G-20 summit this weekend.
Hot button subjects were the meeting of President Trump and President Xi (of China) on Saturday night and then the meeting today between Putin and the Saudi Crown Prince “MBS”.
So here’s what we have so far
- Trump and Xi’s meeting went extremely well…or so we are told. The results of their dinner came out with:
- China agreed to a 90-day negotiation period where no new tariffs will be applied.
- The U.S. and China are said to be stepping up their negotiations to eliminate all tariffs.
- China agreed to purchase more goods from the U.S.
Black Gold [Oil]
As of the time of this writing the futures markets are mere minutes away from opening. I was thinking we might get some news out of the meeting Putin and MBS were supposed to have today….so far there is nothing I can find.
However, we did get the following headline:
Omani Energy Minister Mohammed bin Hamad al-Rumhy said on Sunday that he believed there was a consensus among OPEC oil producers that oil output should be cut.
The authenticity of such a statement should always be questioned, as they are in-fact market moving comments that are usually simple manipulation.
Yeah, I know this next part sounds crazy.
But that’s half the fun isn’t it?
Over the weekend we lost a former President, George Bush Sr. After his death it was announced the U.S. Markets would be closed this Wednesday, December 5th. Then OPEC makes their decision/statement the day after on the 6th.
I see oil doing somewhat of an inverted V shape going into Tuesday close before the conveniently timed market close the day before OPEC makes their decision.
Maybe there’s no relation at all. That’s probably the case. But as a nerd and Matrix fan, allow me to remind you of the quote from Morpheus in the final part of the trilogy: “Where some see coincidence, I see providence.”
We all know that beyond opium, oil has been a big part of the Bush family’s wealth.
Stocks To Watch
- $FXI – the agreement made Saturday should give a nice boost to this China large-cap ETF as well its’ constituents like $BABA $JD $YY and others.
- The China agreement also opened the floodgates for potential allowance of the previously unapproved $QCOM takeover of $NXPI.
- The statement on oil should have you looking at $CL_F $USO $XLE $XOM $MPC $CXE $CLF and other similar names.
- The China news should also drive $QQQ — as well as $SPY and $DIA
DrosFlow / Unusual Options Activity / Money Flow / My Picks
If you haven’t read my stuff before, DrosFlow is the most recent options activity that I consider sharp. Here’s the most recent…
$FOSL JAN19 $20 Ps
$PFE JAN19 $58 Cs
$GSK DEC18 $42 Cs
$TPR JAN19 $40 Cs
$QQQ DEC18 $175 Cs
$MSFT 07DEC18 $115 Cs
$FANG DEC18 $115 Cs
$LVS 07DEC18 $55 Cs
$XLF 07DEC18 $26.5 Cs
Don’t forget, all the trades you take are YOURS and YOUR responsibility. I’m not your advisor. Even if I was I’d tell you the same thing…do your own due diligence before ever entering anything I say.
I see a ton of bio strength coming in with Technical Analysis and headlines. This might be your time to trade some short-term action in $XBI or $IBB for ETFs.
Some specific names I like, beyond the $PFE and $GSK above, include mostly the large cap names but some small ones as well… $ABT $ESRX $CI $DOC $IOS $LLY $NVS $XLNX.
I see pharma (above), tech and energy all driving the markets up into the Bush funeral. I have no idea what to think happens after that. A great deal of it is dependent on OPEC.
So don’t be shy about a bit of bullishness on the front half of the week, just take your profits as you get them.
Cheers and trade safe,