Tag: Trading
Time of the Year to Get Bearish? (SPX, OIL, USD) 11.26.2012
KOTM appropriately pointed out that AAPL’s range, on that day, was 1.5 standard deviations away from the mean…indicating a powerful and unusual hammer for AAPL and subsequently the NDX…thus the SPX and the market. This move preceded a four-sigma day for AAPL. With all this bullish action however, has this recent bo=unce lasted too long and is it time to get short?
The US Dollar index has nice horizontal support from 11/2/12’s open. This day was a massive bull day for the USD index; the formerly mentioned day could prove to be support for the SPX bears. USD bullishness is supported by a rounded bottom and up trending 50-day moving average. Other futures chars, like crude oil, have similar patterns. Oil is also at the recent top if its trend channel, and its respective complication of moving averages are directly above it. Away from the technical prospective, there are also fundamental reasons the bears will tout about.
If there is one thing the mainstream media has covered and talked endlessly about, it has been the looming fiscal cliff. Fidelity cites that, “up to $600 billion of expiring tax cuts, new taxes, and automatic spending cuts are set to take effect at the end of 2012 or beginning of 2013. If they hit all at once, the impact could amount to as much as 4%-5% of GDP.” This could be a serious event for the market if the government does not deal with it appropriately.
History, however, is on the side of the bulls. The last week in November has been bullish historically on average, the mean being up 3.1% since 2003. This conflicts with other research KOTM has done. The average cyu.ber Monday, since 2003, has been down nearly 1% for the SPX and -0.8% for the NDX, but this is just one day and perhaps not an indicator for the whole week. Either way, the recently formed channel will be one more thing to watch.
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S&P Emini & Apple (AAPL) & Google (Goog) Vid Recap 10.11.2012
Morning Rage 10.4.2012
All index, energy, metals, and grains futures are higher today. The Dow futures are up fifty three points, S&P futures are up five and a half, and Nasdaq futures are up eleven. Crude is up a half of a point, while gold futures are up fifteen, silver is up a quarter and platinum gains thirteen. Corn bounces back up seven points.
Marriott (MAR) released its earnings after the market closed yesterday, beating the estimate of $0.40 by four cents. However, the company lowered its yearly earnings outlook. Marriott has been bolstering its lagging US revenue by focusing on overseas growth, especially in China.
Weekly jobless claims are reported today, which may be pushing futures higher this morning as well. Jobless claims are expected to grow this week up three thousand from its prior revised count of 363 thousand.
Covered Call of the Day WMGI 10.3.2012
My trade is to buy the stock at $22 and sell the Nov 20 calls for $2.40. My risk is the stock falling to zero, $19.60 per share, and my reward is the value of the calls, $2.40. My break-even is $19.60. I am hoping to make a return of 10.1% on the call sale.
Morning Rage 10.1.2012
Cal-Maine Foods Inc. (CALM) is scheduled to report quarterly financial results this morning before the market opens. Cal-Main is the largest producer of shell eggs in the US. A market cap of 1.08B, the stock has seen a steady yearly growth of 50%, $0.04 below the 52 week high of $44.98. The stock was up $0.36 on Friday.
The ISM Manufacturing Index will be released today at 10 am EST. The survey measures manufacturing employment, production, new orders, supplier deliveries, and inventories. Any result above 43 shows growth in the US economy, but a shrinking manufacturing sector. Any number above 50 shows a growing manufacturing sector. Analysts are projecting a tenth of a point in growth to 49.7.
Oil Remains Lower After Yesterday's Sell-off 9.18.2012
Benchmark crude closed at $96.62 a barrel, down $2.38 or -2.4%. Oil had its biggest intraday swing since early June, hitting a low of $94.65 a barrel, after trading at a session high of $99.52 Monday morning, failing to break through the $100 key technical level.
The drop in U.S. crude was not as deep as the sell-off in Brent crude oil, which sank from $115.20 a barrel at 1:52 p.m. to $111.60 just 180 seconds later as trading volumes spiked despite the usually quiet Rosh Hashanah holiday. Brent crude settled down $2.87, or -2.5%, to $113.79 a barrel. Energy prices had spent the majority of the session trading marginally higher, with support from geopolitical tensions from around the world.
There is speculation among traders that a potential ‘fat-finger’ trade is responsible for the selling as prices rapidly fell more than $4 in just 20 minutes. There are also rumors of a strategic oil-reserve release. These rumors most likely derived from a report done by Reuters on the Obama administration considering a release much larger than the 30 million barrels from last year. However, the White House has denied these rumors with an official stating, “all options remain on the table, but we have nothing to announce at this time.”
Some analysts simply suggested the price of oil had gotten too high given continued weakness in the global economy, and it’s due for a correction.
Energy traders have enjoyed solid gains in the month of August with Crude-oil prices on the NYMEX up 8.7% from Aug. 1, and Brent crude gaining 7.7% over that period. Oil recently traded to a high above $100 on Friday partly on concerns that the tension in roiling parts of the Middle East and North Africa could trigger supply disruptions. Enthusiasm in the oil markets may soon fade however, due to an increasing negative outlook on global demand and high inventory levels.
Perhaps the euphoria over the Fed has worn off.
Crude spent much of the European session in the red, with the October contract off 52 cents, or -0.5%, to $96.10 a barrel.
Ciro J. Lama is currently an undergraduate studying Finance at the Zicklin School of Business – Baruch College
Twitter: @TraderCantalino
Website: CantalinoAssetManagement.com
September Seasonal Commodity Statistics
Copper prices start to fall as the construction season ends and typically remain on a downtrend through December. Silver on the other hand typically starts to rally in September as demand rises. Jewelers start to buy silver in preparation for the holiday season. Also, farmers in India are known to buy precious metals after their harvest which ends through september.
This year Soybeans and grains are very strong due to drought conditions across large parts of the United States. Historically, soybeans are in a weak period during September, reaching their seasonal lows in October when the harvest is over. Corn is typically in a downtrend, although a frost scare can cause price spikes.
Meat prices, such as live cattle tend to rise as the demand for cattle rises in the Fall. Typically people eat more meat as temperatures cool off. Government programs such as school lunches also increase demand as school is back in session.
In the past 12 years, the Euro has rallied 11 times from Labor Day through the end of the month. I am not sure if this year will go with the historical trend, however a Euro rally before the election could be expected. European uncertainties may become more apparent in the next few months during the U.S. election season.
David Cornes holds a degree in economics from the University of Montana.
CBOETV Interview 8.24.2012
Metals Update 8.24.2012
South Africa accounts for 75% of the world’s platinum supply, with this standoff threatening 40% of the world’s production of the precious metal as workers are protesting wages.
As you can see from the chart below, the platinum/gold ratio is at a historical bottom. I would not hesitate to go long this ratio for various reasons, including platinum’s industrial applications. Platinum is a more rare metal than gold, and I think that it would be a quality investment as investors are flocking from fiat currency investments.
David Cornes holds a degree in economics from the University of Montana.
