Stock market analysis and commentary from a trader's perspective

Monday, November 23, 2015

Monday -- Argentina, Brazil, and Happy Thanksgiving

S&P E-mini Futures:
Down slightly, but hanging at highs.

Today it's all about South America.

After 12 years of Cristina Kirchner’s leftist rule which has arguably driven Argentina into ruin, conservative Francesco Macri, who served two terms as mayor of Buenos Aires, will become only the third non-Peronist President of Argentina since the end of military rule more than three decades ago.

This, as Joe Biden might say, is a "big f***ing deal."

I hope things turn up for the people of Argentina.

Over the weekend, there was an article about nearby Brazil that just might mark a bottom of sorts.

Back in 2011, it was believed that "Brazil will benefit from China´s windfall and might even use China´s resources to shield from the world financial crisis."

Now, full circle, Brazil is believed to be toast.

Predictably, Zero Hedge didn't hold back.

"Put simply: it’s a full on economic meltdown."

"So what's the takeaway besides the fact that Brazil is, for lack of a better word, screwed (because we already knew that)?"

It means the takeaway is that sentiment is so low that it might be time for Brazil to rally.

AUD under pressure. USD index got to 99.98 overnight.

Still looking funky and headed toward inversion.

WTI crude under pressure still. NG trying to rally.

Still thinking gold wants to crack 1050. Silver down, and copper hammered lower another 2%.

S&P Outlook:
Friday didn't clear up the wave count as much as I had hoped. And with the holiday shortened week, it might not pay to play until the odds stack up better.

Would rather see the S&P around the 2000 area or above 2134.72. I doubt it will be solved this week.

So I'll be off for the week -- no blog posts or Stocktwits/Twitter. Heading back to New England to visit my family.

This is a time of giving thanks and feeling grateful, two things we should all focus on each day, not just when a holiday comes around. Still, it's my favorite holiday, and my family's favorite, too. So everyone gets geared up for it. Looking forward to it.

Thank you for visiting these pages each day. Have a Happy Thanksgiving, no matter where you are in the world.

Friday, November 20, 2015

Friday -- Options Expiration

S&P E-mini Futures:
Holding overnight gains into op ex.

How the hell do "US forces" just happen to be in Mali?

Draghi is at it again. "We will act by using all the instruments available within our mandate."

Too bad none of them will work against deflation.

AUD having another good day, yet is still in a multi-month range. EUR understandably weaker. USD firm.

2s and 5s looking horrible compared to 10s and 30s. Inversion.

WTI crude down, NG down-er.

Gold slightly higher, silver slightly lower, copper catching a bid after fresh lows.

S&P Outlook:
Any new high this morning should be looked at as suspect. Yet shorting might be difficult unless internals line up.

Below 2083 could be the first warning that at least a probe of 2065-2070 is possible.

Today could also tip the odds to one side -- B-wave or developing impulse higher in wave 3.

Thursday, November 19, 2015

Thursday -- Green, Green, Green

S&P E-mini Futures:
Joining the chorus of green worldwide, but coming off.

First the Fed, then the BOJ, then the PBOC, then the ECB -- all did nothing but managed to manage expectations in such as way as to make failure sound awesome.

In other words, failed central bank policies will lead to more failed central bank policies, yet what the markets hear is more stimulus."

Failed policies? But the markets are higher!

Not so fast, says Stifel Nicolaus.

This may explain why negative mood is rising as markets are rising
Kuroda: Continuing QQE won't cause financial system problems

ECB Minutes: Risk of deflation relevant but declined since the start of the year

PBOC -- China's central bank on Thursday said it would cut the overnight SLF lending rate to 2.75% from 4.5% and would lower the seven-day rate to 3.25% from 5.5%

And apparently the Fed itself is well pleased that the markets rallied on what now sounds like a certainty for a December rate increase.

USD slightly lower, EUR stronger. AUD ripping, yet JPY stronger.

If everything is so great, if December is now certain, why are treasuries continuing to tilt toward inversion.

And we are interest rate swaps -- which refers to as "one of the deepest and most liquid markets in the global financial universe" -- negative and continuing to confound the bond market by reflecting a sharp reduction in liquidity.

Credit is the ball in this giant game of Three Card Monte. Keep your eye on the ball.

WTI crude down and trading heavy again. NG too.

Gold may want the 1040 area but seems close to a significant low. Sentiment is in the gutter.

S&P Outlook:
A few days ago.


Maybe "2" is over, maybe not. I'm siding with the "maybe not" for now. Internals are a little weak (what else is new) and yesterday's intraday TRIN closed screaming for a pause. Not what is expected if the market is in "3."

Wednesday, November 18, 2015

Wednesday -- Fed Minutes

S&P E-mini Futures:
Firm ahead of Fed Minutes.

Fed minutes at 2pm NY time.

US CPI data showed slighter hotter inflation readings, yet peeking under the hood, it was a sharp rise in prices of medical products that did the trick. Yet more government policies at work.

Not only are Silicon Valley valuations plummeting, but they may be spreading to the general market. The underwriters of a $5.5bn LBO by Carlyle Group just postponed a deal to buy data-storage business Symantec. Mood is changing.

Asia was mixed last night. Europe is red.

USD index still has not cracked 100.

Still a low volume rally, perhaps reflecting a bit of pre-Fed minute confusion.

WTI crude higher on inventory drawdown but not looking too strong otherwise. NG digesting gains.

Gold, silver, and copper submarine races.

S&P Outlook:
There was no overlap yesterday at 2068.24. All options are on the table. Still feeling current action is a "B" of a still-developing ABC down with "C" yet to come after a few days.

"C" could crack 2000 no problem, freak everyone out, and be a counter-intuitive buy.

If wrong, lower for longer, TVIX higher.

Tuesday, November 17, 2015

Tuesday -- The Ultimate War

S&P E-mini Futures:
Ripping higher, along with global markets nearly everywhere (ex China).

Terror is the ultimate war because it has no end and there is always political will for more, because if governments play their cards right, the people demand it to be fought.

Now we can add "instant identification of the culprits" to the mounting evidence that currently nothing is as it seems. Supposedly the "mastermind" has been identified.

We are slowly being dragged into a war between competing caliphates.

Now France is at war in a united front against radical Islam (which may have been the ulterior motive all along, after being warned cryptically that "Terror will come to Europe") and is considering a new constitution that will give the government sweeping authoritative powers previously available only under martial law or the Patriot Act.

European markets are ripping higher as it appears the real reason for war is to make gobs of money.

Sorry if I view such events through a dark lens (losing a former girlfriend in Tower 1 will do that), but two bits of info may be illuminating at this time, one from 2005 and one from 2007. I don't necessarily agree with the scope of the speculation in the links, but the parallels are striking.

I will also add a weird thing that happened Friday. I recently got a new apartment and stepped away from the screens to meet with my former landlord to pick up my security deposit, thinking it would only take about 20-30 minutes. He invited me to meet him at a nearby Dominican restaurant for a drink.

I got there around 12:30pm and didn't leave until 5pm. Bad boy.

Yet it was a great day. We progressed from business to genuine friendship over the course of those hours and made plans to hang out again. In addition to several ice cold Presidente pilsners he even bought me lunch. We had fricase de cabrito, goat stew, which he said was "almost as good as his mother's."

The weird thing is that around 4:30pm local time (1 hour ahead of NY time) one of his friends called. I'll call him Mr. Black.

Mr. Black and my landlord (Mr. Pink from now on) were old buddies from the military. Mr. Pink flew F-16s, and Mr. Black ended up in some vague wing of the FBI that "he can't talk much about."

Before lunch, Mr. Pink had stopped by the local base to buy some duty-free booze for Mr. Black because Mr. Black is not allowed to purchase it in his current role

So Mr. Black, well disguised in doctor's scrubs and driving a humble Hyundai, showed up at the restaurant, quickly downed a beer, and went out to the car with Mr. Pink to transfer the booze.

Mr. Pink came back in and said two things:

1) Mr. Black had to leave sooner than he expected (they had planned to hang out for a while), and . . .

2) the trunk of the Hyundai was filled with automatic weapons, ammo, pistols, and enough combat gear to fight a small war.

The first explosion in France was 9:20pm local time CET -- 5:20pm in Puerto Rico.

I would not like to think that yet again there may have been prior knowledge of a terrible event, but Mr. Black seemed to have been on guard for something, and in hurry too. Of course, it could simply be my imagination.

But you can bet I'm watching the options market on the airline I'm flying home for Thanksgiving, with a special emphasis on nearby puts.

USD new rally highs but did not crest 100.

The low volume bounce is petering out.

WTI crude and NG tanking.

Gold and silver down, and copper hugging the flatline.

S&P Outlook:
The market seems to have wanted higher targets beyond the gap. The 38% retracement is at 2056.48, close to the 2060 volume shelf and 200dma (2064).

Currently the market is higher on inverted A/Ds and weak ticks. Intraday TRIN is flirting with the sell zone. Not a good mix.

Still higher is possible if the market is in "B" of an ABC down. But I continue to suspect it's a corrective phase of an impulsive move to new all-time highs.

If wrong, there will be a hell of a trade around 1800.

Monday, November 16, 2015

Monday -- Nothing Is As It Seems

S&P E-mini Futures:
Bouncing from crisis lows.

The Paris bombings are reprehensible. That people may have died because of a religious war is beyond tragic.

The patterns and parallels to previous "terror" attacks are even worse. It seems each large-scale attack must include at least one perpetrator's passport in new condition recovered near an explosion. There must also by same-day "terror drills" being performed for added confusion, along with a full-scale power blackout for maximum effect.

Be careful not to get sucked into knee jerk problem-reaction-solution psychology. Mass manipulation seems to have spread far beyond television advertising to become the principle objective of the "news."

Macro economic news of note: Japan's Q3 GDP turned negative once again, incredibly for the fifth time since 2008.

Asia was mixed last night, while Europe is mixed so far today.

JPY weaker on hopes of more stimulus. EUR weaker, USD firming.

Low volume rally continues.

WTI crude currently flat, NG up another 1% again.

Gold and silver slightly green, with copper under pressure.

S&P Outlook:
The market elected not to bounce Friday morning, and in doing so put 2020 on the table.

Today's bounce has multiple choices for targets: 2035 area, 2045.97 gap, and 2060 area.

Perhaps an "A" wave of a still-developing ABC down from the November high is occurring.

Perhaps not. Doubtful the market will decide it all in one day and at current levels.

Friday, November 13, 2015

Friday -- Dovespook, Part 2

S&P E-mini Futures:
Down modestly.

After yesterday's full barrage of hawkish Fedspeak which followed previous spookish Dovespeak and drove the markets nuts again (meaning down), Fed Vice Chairman Fischer may be carrying an olive branch wrapped in tea leaves.

From Bloomberg, the Fed’s decision to delay raising interest rates has helped to offset the economic headwinds caused by a strengthening U.S. dollar, Fed Vice Chairman Stanley Fischer said, adding that it “may be appropriate” to raise rates next month.

So if the dollar keeps breaking out to new rally highs, this sounds suspiciously like another reason why the Fed could pause yet again.

Someone recently conjectured that the Fed is trying to cry wolf so many times that when it does finally raise rates the markets won't care. They may be right. If so, its the policy of impotence.

Meanwhile, Asia had a bad night. And Europe is very red at the moment.

USD not getting Fischer's message today...

But treasuries might be. Prices are continuing to make a weak drive higher.

WTI crude at the moment remains pointed down, yet massive supplies stored in ships could disrupt price dynamics near term. Still thinking the final lows are not in, however.

NG enjoying another up day.

Gold, silver, and copper flat to down respectively.

S&P Outlook:
The S&P may be targeting the lower Fib target cited yesterday -- 2038.70.

Yesterday helped the bearish case price wise, wave wise, and personality wise.

If the index wants to go for the kill and establish a bearish wave count (and negate the nearer term bullish potentials) it must do it over the course of the next few trading days by extending and creating a clear impulse down.

Note that the 2038.70 Fib target is still above the 38% retracement level. So the market would still have its work cut out for over the next few trading days to continue.

A bounce above 2068.24 would call the bear case into question. There is a volume shelf at the 2060 area, plus a wide gap at 2075.

Will most likely be a buyer of OEX 915 weekly calls at some point (or 900s later on) today against my TVIX position.

Intraday TRIN closed in the buy zone at 2.01, while VIX closed well outside its upper 2 standard deviation band. So a bounce could and perhaps should be expected.

If one doesn't occur, that's a strong bearish tell. 2020 could be on the table quickly, hence cheap call options vs e-minis.