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.
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
[Note: I’m essentially going to be starting a newsletter that’ll be short-form most of the time. There’ll a side-page on the blog once that kicks into gear for these notes. PDF Version is linked at the bottom]
Hell of a day.
Some solid gains on several names, but the markets as a whole have gone loco. MUY loco.
For an extended period of time during the day today..stocks,bonds,gold, volatility AND the dollar were ALL trading down. Even weirder, downward pressure on all of them simultaneously.
Market dynamics tend to behave in a manner that asset classes are typically forces that act against each other in some weird and twisted attempt at a contrived equilibrium.
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.
Earnings are clearly propping up the markets at this point.
Just a quick glance at the chart will show you that $ES_F was heading downwards pretty aggressively until the first red line; the first big E.R. reports of the season. $NKE and $MU crushed their reports, and the markets responded upwards…but not on weak volume.
[check out the chart in better detail over on tradingview here.]
The second red-line shows another save of $SPY … aided by beats by $RHT and $PAYX.
Rinse and repeat for a while…then the final line is on April 6th, when the first big bank earnings came out.
What Is Going On With The Markets?
Well… I don’t know. Anyone who claims to know with precision is probably guessing and pulling their claims out of their asses.
Here’s what I see…
Option flow is pointing towards a choppy week here, we may easily end up on Friday where we started at close on Monday.
The same options flow is pointing towards upside after this weekly options expiration coming Friday ( April 13th, 2018).
The options flow I’ve been seeing is implicative of downside towards the end of the week.
A member of my trading room asked me about my thoughts on the potential for a breakout in gold and the implications on markets.
I told him about avoiding biases…our 1 on 1 conversation went a little something like this…..
That was my quick answer…at least in terms of the short-term potential for a spike in gold as markets get shaky here.
Here’s a bit more of an elaboration…