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  1. phil

    Good morning!  

    News was once again terrible this morning, especially out of China and I could have written a whole post on that but thought it was a good time for a macro point about why we should be concerned about the market in any event.  

    I'm getting into a lot of silly conversations with people about value lately and I'm being lectured on how value doesn't matter if the market doesn't agree and we should just follow the "wisdom" of the crowd.  This is exactly the kind of BS we often hear at market tops and I'm not against a little momentum trading BUT, when people do it too often for too long – they tend to get it mixed up with their long-term premise and then they tend to bend their minds around to justify their decisions after the fact.  As Wikipedia notes:  

    There are two self-justification strategies: internal self-justification (IS) and external self-justification (ES).[5]

    Internal self-justification refers to a change in the way people perceive their actions. It may be an attitude change, trivialization of the negative consequences or denial of the negative consequences. Internal self-justification helps make the negative outcomes more tolerable and is usually elicited by hedonistic dissonance. For example, the smoker may tell himself that smoking is not really that bad for his health.

    External self-justification refers to the use of external excuses to justify one's actions. The excuses can be a displacement of personal responsibility, lack of self-control or social pressures. External self-justification aims to diminish one's responsibility for a behavior and is usually elicited by moral dissonance. For example, the smoker might say that he only smokes socially and because other people expect him to.

    That's the crux of the crowd-following arguments.  Everyone is doing it, so how bad can it be?  Well, it can be 2008 bad, is my answer.  And I'm not trying to come across all doom and gloom but I do tend to get more negative when I feel our Members may be getting too  positive (and vice-versa when too gloomy) to try to inject a bit of balance into the conversation.  

    We are in no better shape today than we were when I called for cashing out long positions at the end of last month.  We're using the same bounce levels we set on the 6th, when we first bottomed out and EXPECTED a bounce.  The whole point of the bounce levels is that we're either going to have weak ones, which keep us bearish, or strong ones, which make us neutral until either the 50% lines cross or the weak bounce lines fail to hold up.  

    • Dow 15,108 (weak bounce) and 15,216 (strong bounce)
    • S&P 1,622 and 1,634
    • Nasdaq 3,420 and 3,440
    • NYSE 9,280 and 9,360
    • Russell 975 and 981.40

    As I noted yesterday, when things were looking up, we also have to cross our 50% lines at 15,270, 1,640, 3,460, 9,400 and 985 and, at noon yesterday, only the NYSE and the Dow were red.  Now, it's just the RUT that's green and the S&P is right on the line (so we'll watch 1,640 very closely).  

    Also, as noted in the morning's news reading, 80% of the 107 S&P companies that have provided guidance updates for Q2 have LOWERED their outlook.  That's vs 62% "normally" (as the main reason people do pre-announce is to warn, of course).  Materials (of course), IT and Industrials are hardest hit, which makes the Dow a good short again as it attempts to get back over 15,200.  

    On the other hand, expectations are now so low, they'll be hard to miss with the S&P 500 now averaging 1.1% earnings growth (below the rate of buy-backs!), down from 4.3% on 3/31.  Keep in mind that the overall market is up 4% since 4/1 so there's a pretty big disconnect between the run-up we've had and the reality we're running headlong into!

    Oil hit $98.50 again on the usual 9am pump and, of course, it's a short again.  That's on /CL by the way, which is now /CLQ3 (Aug) in TOS, the old /CLN3 contract (July) also hit $98.50 already and dropped like a rock to $98.15.  

    Copper is melting down at $3.15 as this China thing is SERIOUS (and it's also serious when there's so many bad things to talk about that I don't have time to go over them all in one day!).  Nat gas is $3.90, gasoline is $2.88, gold is $1,378 and silver is $21.70.  

    The Dollar is 81.05, Euro $1.335, Pound $1.558 and 95.50 Yen to the Dollar with the Nikkei flying at 13,400 – that's up 300 since the index closed flat for the day.  

    The VIX i8s at 16.69 and TLT is 112.75 so no one seems very worried – but I still am.  

    Rumors that Bernanke is stepping down are gathering steam.  He wasn't scheduled to go to Jackson Hole since last year (a big deal was made about it then but it's some sort of personal conflict) but that won't stop people from "discovering" it now.  

    Hopefully, the Fed will give us a bit of clarity tomorrow but, even as I write that, I'm laughing…

    At the open: Dow +0.2% to 15211. S&P +0.13% to 1641. Nasdaq +0.21% to 3459.

    Treasurys: 30-year -0.23%. 10-yr -0.15%. 5-yr -0.1%.

    Commodities: Crude +0.39% to $98.41. Gold -0.73% to $1372.95.

    Currencies: Euro -0.06% vs. dollar. Yen +1.13%. Pound +0.91%.

    Market preview: U.S. stock futures and European shares are flat-to-higher after U.S. CPI comes in slightly below expectations and as the FOMC meets on the first day of a two-day policy meeting. The S&P Mini is flat. "Today should be quiet, as people are only asking about tomorrow," says economic strategist Andrew Wilkinson. Sony is +4.25% after Dan Loeb ups the ante over a spin-off for the company's entertainment division. Ongoing: Paris Air Show 

    "The biggest contrarian play in the market today is assets linked to China (FXICAF)," says Michael Hartnett, summarizing BAML's latest Fund Manager Survey, which shows money flowing out of commodities (DBC) and emerging markets (EEMDEMVWO). Where's the money going? The eurozone and the U.S. Where it's not going is fixed-income (AGGBND) – 50% of managers say they're now underweight bonds as opposed to 38% last month.

    May Housing Starts: 914K vs. 950K forecast, 856K previous (revised from 853K).

    More on Housing Starts: Total starts were up 6.8% from April, up 28.6% from a year ago. Single family starts in were about flat M/M. Total building permits of 974K fell 3.1% M/M, and gained 20.8% Y/Y. Single family permits rise 1.3% M/M. (full report) 

    May Consumer Price Index: +0.1%;vs. +0.2% expected, -0.4% prior. Core CPI +0.2%; in-line with expectations, +0.1% prior.

    The FOMC will be able to chew on inflation data for May when it meets today, with the reading due out this morning.Economists expect that CPI rose 0.2% on month after sliding 0.4% in April, driven up by slightly higher food and gasoline costs. "Inflation is low in the U.S. at the moment, giving the Fed more room to wait for improvement in employment before it starts tapering," say analysts at Danske Daily.

    ICSC Retail Store Sales: +0.3% W/W, vs. -2.7% last week.+2.5% Y/Y vs. +2.2% last week. 

    More on ICSC Retail Sales: The retail sector put in a mixed week with department stores, electronics store chains ([[RSH[[, BBY), and drug stores (CVSWAG, RAD]]) strong for the period, but sales at dollar stores (DGDLTRFIVEFDO) and wholesale clubs (COST,PSMT) notably weak. After last week's drop in sales cut into forward progress, the year-over-year gain in retail chain store sales stands 2.5% higher after threatening a 3% pace earlier in the year. 

    Redbook Chain Store Sales: +2.9% Y/Y vs. +2.8% last week. 

    MSCI's reclassification of Greece to emerging market is a yawner as far as ETFs go, writes Dennis Hudachek, as the country's presence in the EFA is less than 0.10%. With Coca-Cola Hellenic (CCHBF.PK) no longer part of the MSCI Greek Index, the country's addition to the EEM will be of minimal effect. 

    China's determination to reign in the rapid growth of credit is being tested by a short-term credit squeeze at banks, with rates in the interbank funding market soaring and foreign-capital inflows slowing. The banks want the People's Bank of China to inject liquidity by cutting the reserve-requirement ratio, but so far the PBOC is holding firm and maintaining the tight conditions. 

    nasty bout of late-session selling sends Thai shares (THD-3.4%) plunging nearly 3%, bucking a generally positive regional trend. Philippine stocks (EPHE +2.3%) rise 2.83% in Manila while shares in Indonesia (IDX +1%) and Singapore (EWS +0.9%) post solid gains.

    FU Oppenheimer!  Oppenheimer lifts its price target on SodaStream (SODA) to $85 following the company's intriguing deal with Whirlpool to jointly develop a home carbonation system. SODA +1.5% premarket to $72.05. 

    The rumored iWatch will be more "hobby" than major product line for Apple (AAPL), says Jefferies' Peter Misek. Likely not having a cellular chip, the iWatch would need to be paired with an iPhone for full functionality. Starting with some pricing assumptions and then slapping a 5% penetration on the installed iPhone base of 250M would move the EPS needle by only about 1%. 





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Zero Hedge

Why Bond Traders Have Never Been More Confused: "The Rates Market Is Sending Diametrically Opposite Messages"

Courtesy of ZeroHedge. View original post here.

Last weekend, as Deutsche Bank's derivatives strategist Aleksandar Kocic was looking at the spread between the short and long end of the curve, and while contemplating the lack of market volatility, he concluded that "given where long rates are, Fed appears as overly hawkish – it has only two more hikes to go and, for volatility and risk premia to reprice higher, the gap h...



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Phil's Favorites

Bearish Fund Traders Head For Early Hibernation

 

Bearish Fund Traders Head For Early Hibernation

Courtesy of Dana Lyons, with introduction by Zero Hedge 

'Speculators' have never been so confidently complacent that 'all is well'.

Speculative positioning in VIX futures and options remains at its most short in history as traders refuse to back away from 'what works' as realized volatility collapses to its lowest in over 60 years......



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ValueWalk

Full Transcript Of Donald Trump Interview With Maria Bartiromo [PREVIEW]

By VWArticles. Originally published at ValueWalk.

Please see below for the full transcript of FOX Business Network’s Maria Bartiromo. The interview with President Donald Trump today that will be airing across FOX Business Network’s (FBN) Mornings with Maria (6-9AM/ET) and FOX News Channel’s (FNC) Sunday Morning Futures 10AM/ET).

]]> Know more about Russia than your friends:

Get our free ebook on how the Soviet Union became Putin's Russia.

When:

Part 1 - Sunday, October 22nd  on FOX News Channel’s Sunday Morning Futures (10-11AM/ET)

Part 2 - Monday, October 23rd on FOX Business Network’s Mornings with Maria (6-9AM/ET)

...



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Insider Scoop

There Could Be 109% Upside In uniQure As Company Advances Gene Therapy Into Clinical Trials

Courtesy of Benzinga.

Related QURE 32 Stocks Moving In Friday's Mid-Day Session Wall Street's M&A Chatter From October 19: Uniqure, Ulta, Sally Beauty,...

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Chart School

All Day Recovery

Courtesy of Declan.

It had looked bleak for markets at the open following a big gap down. However, this was just a temporary hit as markets came back right from the open.  It's also good news for bulls or long holders. The S&P shows this best.


The Dow Jones actually went as far as to test former upper channel resistance, now turned support.  Volume climbed in accumulation.

...

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Digital Currencies

The World's Largest ICO Is Imploding After Just 3 Months

Courtesy of Zero Hedge

Earlier this summer, Tezos smashed existing sales records in the white-hot IPO market after the company’s pitch to build a better blockchain for cryptocurrencies made it one of the buzziest ICOs in the world. As we noted at the time, the company capitalized on that buzz by courting VC firms and other institutional investors with a $50 million token pre-sale. After the company opened up selling to the broader public, demand soared as investors greedily bought up tokens in spite of glitches that threatened to derail the sale early on. By the end of its weeks-long token sale in July, Tezos had sold more than $230 million.

Now, Tezos is proving that authorities in the US and China were on to something when they decided to crack down on the ICO market, which has become a cesspool of...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

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Biotech

Circadian rhythm Nobel: what they discovered and why it matters

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Circadian rhythm Nobel: what they discovered and why it matters

Courtesy of Sally Ferguson, CQUniversity Australia

Today, the “beautiful mechanism” of the body clock, and the group of cells in our brain where it all happens, have shot to prominence. The 2017 Nobel Prize in Physiology or Medicine has been awarded to Jeffrey C. Hall, Michael Rosbash and Michael W. Young for their work on describing the molecular cogs and wheels inside our biological clock.

In the 18th century an astronomer by the name of Jean Jacques d'Ortuous de Ma...



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Members' Corner

Day of Last Dances

News today has been relentlessly terrible. A horrific mass murder happened last night in Las Vegas. (Our politician's abject failure to address gun control is beyond sickening.) And today, reports that Tom Petty died of a heart attack, followed by reports that Tom Petty is not dead, and now reports confirming that Tom Petty has passed away. 

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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