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.

Trade safe.

Cheers,

– dros

 

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.