Trading Desk

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“Wedge” way will we go?

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Morning Macro News

posted by CAPIS on 04/22/2015 at 7:51 am
by CAPIS on 04/22/2015

Good Morning, The SPX has worked itself into a nice looking wedge the last two months, as I mentioned Monday, as you can see in my “SPX Current” chart below. We’re almost through Peak Earnings Season, so I’m eagerly awaiting the moment it pops out of it, with volume, either up or down. As Mr. Miyagi would say, “Patience, Daniel san!” I truly don’t have much to add like I normally do. Monday we gained back almost all of Friday’s drop; bouncing off the flat 20 & 50 DMA’s, as the market continues to go sideways in a process of making higher lows and lower highs (a wedge, if you will). You can draw this wedge on your chart in any way you like, as it tells the same story: the market is looking for direction. It needs a catalyst. Nothing has happened yet. There’s no major eco today, again, so I’m looking for further tests of the downside to find support at either S2 @ 2085.18, or a test of the lower part of the wedge (where the 20 & 50 DMAs are) near 2080. Hopefully you’re long near 2040, hedged to the downside, and waiting. Put some Christopher…

Good Morning, The SPX has worked itself into a nice looking wedge the last two months, as I mentioned Monday, as you can see in my “SPX Current” chart below. We’re almost through Peak Earnings Season, so I’m eagerly awaiting the moment it pops out of it, with volume, either up or down. As Mr. Miyagi would say, “Patience, Daniel san!” I truly don’t have much to add like I normally do. Monday we gained back almost all of Friday’s drop; bouncing off the flat 20 & 50 DMA’s, as the market continues to go sideways in a process of making higher lows and lower highs (a wedge, if you will). You can draw this wedge on your chart in any way you like, as it tells the same story: the market is looking for direction. It needs a catalyst. Nothing has happened yet. There’s no major eco today, again, so I’m looking for further tests of the downside to find support at either S2 @ 2085.18, or a test of the lower part of the wedge (where the 20 & 50 DMAs are) near 2080. Hopefully you’re long near 2040, hedged to the downside, and waiting. Put some Christopher…

Early Exercise – Calls

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Volatility Monitor

posted by CAPIS on 04/22/2015 at 7:15 am
by CAPIS on 04/22/2015

SPX futures are off nearly 4 points to 2087.25 as Europe is setting the tone with its first decline in three days.  The Stoxx Europe 600 is off .4% while the Nikkei 225 is over 20,000 for the first time since 2000.  Both oil and gold are slightly lower.  The BOE officials have unanimously voted to leave the UK’s main interest rate unchanged.  The spot VIX finished 13.25 yesterday.  The VIX futures are all higher modestly on the negative equity tone. Early Exercise (Calls)–  I’ve heard many portfolio managers voice concern about early assignment after writing call options on a position that he/she has no intention of selling.  In fact, the mere possibility of assignment has even precluded some from writing calls.  To be sure, when options are sold the right to exercise is entirely in the hands of the owner of the option.  However, any rational owner of a call option would never exercise his right to call the stock prior to expiration but for one exception:  a dividend* (and only the day before ex-div). Like most things, we could say that you would only exercise a call when the benefits are greater than the costs.  A dividend is…

SPX futures are off nearly 4 points to 2087.25 as Europe is setting the tone with its first decline in three days.  The Stoxx Europe 600 is off .4% while the Nikkei 225 is over 20,000 for the first time since 2000.  Both oil and gold are slightly lower.  The BOE officials have unanimously voted to leave the UK’s main interest rate unchanged.  The spot VIX finished 13.25 yesterday.  The VIX futures are all higher modestly on the negative equity tone. Early Exercise (Calls)–  I’ve heard many portfolio managers voice concern about early assignment after writing call options on a position that he/she has no intention of selling.  In fact, the mere possibility of assignment has even precluded some from writing calls.  To be sure, when options are sold the right to exercise is entirely in the hands of the owner of the option.  However, any rational owner of a call option would never exercise his right to call the stock prior to expiration but for one exception:  a dividend* (and only the day before ex-div). Like most things, we could say that you would only exercise a call when the benefits are greater than the costs.  A dividend is…

No eco = less volatility.

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Morning Macro News

posted by CAPIS on 04/20/2015 at 7:43 am
by CAPIS on 04/20/2015

Good Morning! Well another interesting way to close out the week as Friday gave us all a look at the potential for downside in equities… but did it really do much? The SPX sliced through supports on the daily chart with a huge drop to start the morning to S3 during the first hour! This was mostly predicated on the move in China to curb margin trading. SPX hung around this S3 / 2080-2085 level for the majority of the day, lining up with its 20 & 50 DMAs on the daily chart as well. It had one small move lower going into the 2:00 pm big boy hours to see if shorts would continue to lean that way; but it found support at the 2075 level (from earlier this month). It also put us slightly ST oversold on the daily chart for the first time in weeks. SPX closed lower Friday by -1.13% to 2081.18, which was -0.99% for the week. Our grind sideways continues with all ST and MT trends flat, still. SPX is finding resistance near 2100, and support near 2050. Same story different day. We’re still quite in the middle of Peak Earnings Season with a…

Good Morning! Well another interesting way to close out the week as Friday gave us all a look at the potential for downside in equities… but did it really do much? The SPX sliced through supports on the daily chart with a huge drop to start the morning to S3 during the first hour! This was mostly predicated on the move in China to curb margin trading. SPX hung around this S3 / 2080-2085 level for the majority of the day, lining up with its 20 & 50 DMAs on the daily chart as well. It had one small move lower going into the 2:00 pm big boy hours to see if shorts would continue to lean that way; but it found support at the 2075 level (from earlier this month). It also put us slightly ST oversold on the daily chart for the first time in weeks. SPX closed lower Friday by -1.13% to 2081.18, which was -0.99% for the week. Our grind sideways continues with all ST and MT trends flat, still. SPX is finding resistance near 2100, and support near 2050. Same story different day. We’re still quite in the middle of Peak Earnings Season with a…

FXI (iShares China) Skew

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Volatility Monitor

posted by CAPIS on 04/17/2015 at 11:15 am
by CAPIS on 04/17/2015

Post Written (4/16/15)* SPX futures are off 8 points to 2091.75 as Jobless Claims came in below 300k for the sixth straight week.  Housing Starts increased less than forecast last month.  Oil is trading off roughly $1, slipping from 2015 highs.  The spot VIX finished 12.84 yesterday.  The VIX futures are all higher before the open on the negative equity tone. The Hang Seng Index and Shanghai Composite Index have been on a tear lately.  In fact, both have moved up by 11% this month alone.  The returns have pushed skew to near its lowest levels of the past decade.  In fact, the skew is negative… meaning the 10% OTM put is actually trading on a cheaper implied volatility than the 10% OTM calls.  Take a look at the graph below for FXI (iShares China Large-Cap ETF).  The white line at the bottom shows a value today of -.692 and a blip low of -1.79 back in late November for the 3-month options.  The present reading is obviously in the top 1% of readings for the last decade.  The mean and median reading are both right around 4.77 vol points (puts > calls).  As Goldman notes, “inverted or negative skew…

Post Written (4/16/15)* SPX futures are off 8 points to 2091.75 as Jobless Claims came in below 300k for the sixth straight week.  Housing Starts increased less than forecast last month.  Oil is trading off roughly $1, slipping from 2015 highs.  The spot VIX finished 12.84 yesterday.  The VIX futures are all higher before the open on the negative equity tone. The Hang Seng Index and Shanghai Composite Index have been on a tear lately.  In fact, both have moved up by 11% this month alone.  The returns have pushed skew to near its lowest levels of the past decade.  In fact, the skew is negative… meaning the 10% OTM put is actually trading on a cheaper implied volatility than the 10% OTM calls.  Take a look at the graph below for FXI (iShares China Large-Cap ETF).  The white line at the bottom shows a value today of -.692 and a blip low of -1.79 back in late November for the 3-month options.  The present reading is obviously in the top 1% of readings for the last decade.  The mean and median reading are both right around 4.77 vol points (puts > calls).  As Goldman notes, “inverted or negative skew…

Earnings, US Eco and ECB.

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Morning Macro News

posted by CAPIS on 04/15/2015 at 7:18 am
by CAPIS on 04/15/2015

Good Morning! Monday the SPX opened higher, marking a HOD at 2107.65 during the first hour… and then began the sell-off. As I mentioned that morning, it wouldn’t surprise me if the 2100 level (which has been a good short for a while now) was a place that people take profits / hedge / renew shorts going into earnings. The SPX took the bait and started a sell-off that morning from R1 to test 2100, then the PP, then S1, until we closed at the LOD; down -46 bps to 2092.43. This was not a particularly scary sell-off, though, and the market is still in the 2080-2100 resistance / value range. Tuesday we saw some weaker eco put a little fear in the morning hearts as SPX dropped to make LODs at 2083.24… which, looking at the daily chart, is the 10, 20, and 50 DMA’s! SPX loved that support and quickly made its way back to the PDC level by 11:00 am. From there we slowly made our way to the PP to make a HOD; going sideways at 2095 for the majority of the day with a close up +16 bps to 2095.84. So while the daily chart…

Good Morning! Monday the SPX opened higher, marking a HOD at 2107.65 during the first hour… and then began the sell-off. As I mentioned that morning, it wouldn’t surprise me if the 2100 level (which has been a good short for a while now) was a place that people take profits / hedge / renew shorts going into earnings. The SPX took the bait and started a sell-off that morning from R1 to test 2100, then the PP, then S1, until we closed at the LOD; down -46 bps to 2092.43. This was not a particularly scary sell-off, though, and the market is still in the 2080-2100 resistance / value range. Tuesday we saw some weaker eco put a little fear in the morning hearts as SPX dropped to make LODs at 2083.24… which, looking at the daily chart, is the 10, 20, and 50 DMA’s! SPX loved that support and quickly made its way back to the PDC level by 11:00 am. From there we slowly made our way to the PP to make a HOD; going sideways at 2095 for the majority of the day with a close up +16 bps to 2095.84. So while the daily chart…

Peak Earnings Season!

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Morning Macro News

posted by CAPIS on 04/13/2015 at 7:33 am
by CAPIS on 04/13/2015

Happy Monday, It’s Peak Earnings Season, so I will be “relatively” brief in my speculative assessments. Friday, the market followed my morning thoughts pretty well. We climbed to, and hung around, 2100 most of the day. The “up” was in, so it was nice to see us close above 2100… even if it wasn’t a resounding bullish close. SPX settled up 0.52% on the day, and +1.70% for the week! Now we’re in Peak Earnings Season which really gets going tomorrow (with the likes of JNJ, JPM, FAST, WFC, CSX, INTC, etc.). There’s no big eco today beyond a minor Monthly Budget Statement at 2:00 pm ET, so tomorrow also marks the beginning of eco for the week with BIG Retail Sales and PPI at 8:30 am. Wednesday we get a spattering of interesting eco with Beige Book in the afternoon, but Thursday (building Permits, jobless claims, Philly Fed Manuf, start of G20 Meetings and FOMC members speaking) and Friday (CPI, UofMich Sentiment, Leading Indicators, Day2 of G20 and Day1 of IMF Meetings) is the big news days with earnings to push us around. Through all the eco, earnings are going to give us the real trade as we’ll get…

Happy Monday, It’s Peak Earnings Season, so I will be “relatively” brief in my speculative assessments. Friday, the market followed my morning thoughts pretty well. We climbed to, and hung around, 2100 most of the day. The “up” was in, so it was nice to see us close above 2100… even if it wasn’t a resounding bullish close. SPX settled up 0.52% on the day, and +1.70% for the week! Now we’re in Peak Earnings Season which really gets going tomorrow (with the likes of JNJ, JPM, FAST, WFC, CSX, INTC, etc.). There’s no big eco today beyond a minor Monthly Budget Statement at 2:00 pm ET, so tomorrow also marks the beginning of eco for the week with BIG Retail Sales and PPI at 8:30 am. Wednesday we get a spattering of interesting eco with Beige Book in the afternoon, but Thursday (building Permits, jobless claims, Philly Fed Manuf, start of G20 Meetings and FOMC members speaking) and Friday (CPI, UofMich Sentiment, Leading Indicators, Day2 of G20 and Day1 of IMF Meetings) is the big news days with earnings to push us around. Through all the eco, earnings are going to give us the real trade as we’ll get…

Friday “Possible” Wedge Break

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Morning Macro News

posted by CAPIS on 04/10/2015 at 9:22 am
by CAPIS on 04/10/2015

Good Morning everyone! I’ve been out the past few days dealing with plumbing issues, but that’s now resolved and the market is getting curious-or… Wednesday, the market followed my general thesis from my morning comment; hanging around the PP / 2080 level going into the FOMC Meeting minutes. With some volatility during hte day, ultimately we closed in that Point of Control (POC) level of 2080 (close was 2081.90). Thursday gave us some minor profit taking to start the day, bouncing back to the PP and PDC levels for testing going into lunch, and then a lift-off the last hour to break the morning high with the GE news (also energy names were higher all day). Now we’re hanging out pre-market with S&P futures up 2.00 points to 2087.75 (which is 2095 for spot). Futures were mostly flat overnight until 6:00 am when we saw a move to test a Globex High of Day (HOD) of 2090.50 which is 2098 on SPX. That marks the highs on SPX, pre-market, at R1 (2098.23) which is in the 2080-2100 resistance level, going into Peak Earnings Season, I’ve been writing about. Now, this is a pretty nice move in my book going into Peak…

Good Morning everyone! I’ve been out the past few days dealing with plumbing issues, but that’s now resolved and the market is getting curious-or… Wednesday, the market followed my general thesis from my morning comment; hanging around the PP / 2080 level going into the FOMC Meeting minutes. With some volatility during hte day, ultimately we closed in that Point of Control (POC) level of 2080 (close was 2081.90). Thursday gave us some minor profit taking to start the day, bouncing back to the PP and PDC levels for testing going into lunch, and then a lift-off the last hour to break the morning high with the GE news (also energy names were higher all day). Now we’re hanging out pre-market with S&P futures up 2.00 points to 2087.75 (which is 2095 for spot). Futures were mostly flat overnight until 6:00 am when we saw a move to test a Globex High of Day (HOD) of 2090.50 which is 2098 on SPX. That marks the highs on SPX, pre-market, at R1 (2098.23) which is in the 2080-2100 resistance level, going into Peak Earnings Season, I’ve been writing about. Now, this is a pretty nice move in my book going into Peak…

FOMC Meeting Minutes

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Morning Macro News

posted by CAPIS on 04/08/2015 at 7:16 am
by CAPIS on 04/08/2015

Happy Wednesday to ya! Well, I’m glad to know I wasn’t the only one fooled pre-market on Monday by the post-NFP decline! We were hanging around 2050, and it seemed like it wasn’t going to keep going lower… but I had no way of knowing the move when we opened would happen. Most, if not all, was predicated on FOMC voting member Dudley’s dovish comments at the New Jersey Performing Arts Center. at 8:30 am that morning. Monday, the SPX opened at 2064.87, quickly declined to catch “down” to futures, and making its LOD during the first 5 minutes at 2056.52. Within an hour we were testing 2077 from below, en route to an R2 test at 2080. Oh, and we blew through the flat 5, 10, and 20 DMA Short Term “trend” lines. We rose as high as 2086.99 before settling off to 2080.62; right on R2. Looking at the daily chart, the candle shows a buy near the 2014 Close, with failure to break last weeks Highs. Tuesday, with no eco to speak of, we performed a balancing act. We rose to test / break above last week’s highs; making new highs for this week at 2089.81. 2085 was…

Happy Wednesday to ya! Well, I’m glad to know I wasn’t the only one fooled pre-market on Monday by the post-NFP decline! We were hanging around 2050, and it seemed like it wasn’t going to keep going lower… but I had no way of knowing the move when we opened would happen. Most, if not all, was predicated on FOMC voting member Dudley’s dovish comments at the New Jersey Performing Arts Center. at 8:30 am that morning. Monday, the SPX opened at 2064.87, quickly declined to catch “down” to futures, and making its LOD during the first 5 minutes at 2056.52. Within an hour we were testing 2077 from below, en route to an R2 test at 2080. Oh, and we blew through the flat 5, 10, and 20 DMA Short Term “trend” lines. We rose as high as 2086.99 before settling off to 2080.62; right on R2. Looking at the daily chart, the candle shows a buy near the 2014 Close, with failure to break last weeks Highs. Tuesday, with no eco to speak of, we performed a balancing act. We rose to test / break above last week’s highs; making new highs for this week at 2089.81. 2085 was…

NFP, yeah you know me!

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Morning Macro News

posted by CAPIS on 04/06/2015 at 7:19 am
by CAPIS on 04/06/2015

Good Morning, Non-Farm Payrolls hit Good Friday morning… and were not so good. Surveys expected a +245k increase, while we came in well short at 126k (almost half what was expected!). They also revised the previous month’s lower by -30k. For the short amount of time equity index futures were open on Friday, they dropped to 2040 in a hurry. Not surprisingly, bonds rallied (10-year yield dropped from a 1.92 to a 1.80 Low Of Day (LOD) before reaching back to 1.83ish). With data trailing even the most pessimistic forecasts, speculation that the Fed will raise rates much later than originally expected is increasing. Concern over corporate profits getting worse will only be exacerbated if the economy appears weaker than we want. So! With today being Easter Monday, and the majority of Europe is closed for business, volume’s (even with the NFP number from Friday) should be below average. We’re near 2040 support, so any move lower to that level on light volume and I’m a general buyer. If we break 2040, on volume, then I”m looking to the 200 DMA and 2000 tests for next big daily chart supports. ESM5 is trading lower by -15.50 points (2044) vs. Thursday’s Close, hanging around…

Good Morning, Non-Farm Payrolls hit Good Friday morning… and were not so good. Surveys expected a +245k increase, while we came in well short at 126k (almost half what was expected!). They also revised the previous month’s lower by -30k. For the short amount of time equity index futures were open on Friday, they dropped to 2040 in a hurry. Not surprisingly, bonds rallied (10-year yield dropped from a 1.92 to a 1.80 Low Of Day (LOD) before reaching back to 1.83ish). With data trailing even the most pessimistic forecasts, speculation that the Fed will raise rates much later than originally expected is increasing. Concern over corporate profits getting worse will only be exacerbated if the economy appears weaker than we want. So! With today being Easter Monday, and the majority of Europe is closed for business, volume’s (even with the NFP number from Friday) should be below average. We’re near 2040 support, so any move lower to that level on light volume and I’m a general buyer. If we break 2040, on volume, then I”m looking to the 200 DMA and 2000 tests for next big daily chart supports. ESM5 is trading lower by -15.50 points (2044) vs. Thursday’s Close, hanging around…

April Fool’s Day!

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Morning Macro News

posted by CAPIS on 04/01/2015 at 7:24 am
by CAPIS on 04/01/2015

Happy April Fool’s everyone! I missed yesterday dealing with some plumbing problems at the house, so let’s recap the EOM/EOQ and then get into what we can expect from today. Monday we rose higher than my expectations from the morning (I thought we’d top out at R3 near 2077 or so). Instead we broke through R3 (and the 20 DMA) during the first 10 minutes! We then tested the 10 DMA from below for resistance, finding some there for the first 2.5 hours with support at R3. When noon lunch began we broke the morning highs and slowly made our way north to a HOD of 2088.97 before settling back at 2086.24 (right on my white upward sloping trend line in the below “SPX Current” chart). Then we got Tuesday and the EOM/EOQ volume. Tuesday saw us give up most of those gains from Monday. We opened near the weekly PP (around 2074), found our support, rose to break the daily PP en route to marking our HOD with a test, from below, of the 10 DMA (resistance again). We then just bounced around for the majority of the day until the last hour when selling pressure saw us break…

Happy April Fool’s everyone! I missed yesterday dealing with some plumbing problems at the house, so let’s recap the EOM/EOQ and then get into what we can expect from today. Monday we rose higher than my expectations from the morning (I thought we’d top out at R3 near 2077 or so). Instead we broke through R3 (and the 20 DMA) during the first 10 minutes! We then tested the 10 DMA from below for resistance, finding some there for the first 2.5 hours with support at R3. When noon lunch began we broke the morning highs and slowly made our way north to a HOD of 2088.97 before settling back at 2086.24 (right on my white upward sloping trend line in the below “SPX Current” chart). Then we got Tuesday and the EOM/EOQ volume. Tuesday saw us give up most of those gains from Monday. We opened near the weekly PP (around 2074), found our support, rose to break the daily PP en route to marking our HOD with a test, from below, of the 10 DMA (resistance again). We then just bounced around for the majority of the day until the last hour when selling pressure saw us break…

EOM/EOQ

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Morning Macro News

posted by CAPIS on 03/30/2015 at 7:31 am
by CAPIS on 03/30/2015

Good Monday morning to you all, I plan on writing today, Wednesday, and Friday, so let’s see if my creative juices can give you something interesting to trade into the last day of the month: tomorrow. Surprise surprise! Last week we closed just slightly above the 2014 level of 2058.90; otherwise known as up +0.10% YTD. It was a -2.23% decrease for the week after rising +2.66% the week before. The 2014 Close continues to act like a nice value level / gravitational force for anyone NOT looking to face any specific direction with volume. Here’s my two cents: with it being the End of Month (EOM) / End of Quarter (EOQ) tomorrow, and a four-day work week with the Good Friday holiday, I’m expecting some fun Market On Open (MOO) and Market On Close (MOC) volume tomorrow, and then Wednesday volume dissipates into the 3-day weekend. This is a pretty big week for eco with ADP Non-Farm Employment change Wednesday with ISM Manufacturing, as well as NFP / the Unemployment Rate on Friday… but we won’t be trading that information until next Monday. So! With S&P futures higher this morning due to easing speculation as China’s central bank chief…

Good Monday morning to you all, I plan on writing today, Wednesday, and Friday, so let’s see if my creative juices can give you something interesting to trade into the last day of the month: tomorrow. Surprise surprise! Last week we closed just slightly above the 2014 level of 2058.90; otherwise known as up +0.10% YTD. It was a -2.23% decrease for the week after rising +2.66% the week before. The 2014 Close continues to act like a nice value level / gravitational force for anyone NOT looking to face any specific direction with volume. Here’s my two cents: with it being the End of Month (EOM) / End of Quarter (EOQ) tomorrow, and a four-day work week with the Good Friday holiday, I’m expecting some fun Market On Open (MOO) and Market On Close (MOC) volume tomorrow, and then Wednesday volume dissipates into the 3-day weekend. This is a pretty big week for eco with ADP Non-Farm Employment change Wednesday with ISM Manufacturing, as well as NFP / the Unemployment Rate on Friday… but we won’t be trading that information until next Monday. So! With S&P futures higher this morning due to easing speculation as China’s central bank chief…

GDP Friday

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Morning Macro News

posted by CAPIS on 03/27/2015 at 7:06 am
by CAPIS on 03/27/2015

Happy Friday to you all! Well what a fun little day we had yesterday. I mentioned in my Thursday comment I thought we’d see 2040, as that is the most likely place volume will give support (March 10-13). We had closed three days in a row, Monday-Wednesday, at the Low of Day (LOD), with Wednesday’s Close just a smidge off the 2014 Close (i.e. flat line) at 2058.90. So pre-market Thursday, futures moved to an overnight Globex LOD of 2033.25, which in cash terms is 2041.75ish (i.e. just a couple points above the big 2040 support). It then moved to its S1 / 2040 level and hung out there from 6:00-8:00 am; finding value. As soon as SPX opened we rose to bounce off SPX S1 and 2050 (the middle). shorts decided to hold it below 2060 for the first hour and go to test / make new lows at 2045.50, which lined up with the stop-flushing-tick that ES made around 8:35 am. SPX immediately turned around and made it known that 2050 / S1 was not going to go quietly. After three falling days (which from Monday’s high to Thursday’s Low equaled a -3.2% decrease), and being ST very…

Happy Friday to you all! Well what a fun little day we had yesterday. I mentioned in my Thursday comment I thought we’d see 2040, as that is the most likely place volume will give support (March 10-13). We had closed three days in a row, Monday-Wednesday, at the Low of Day (LOD), with Wednesday’s Close just a smidge off the 2014 Close (i.e. flat line) at 2058.90. So pre-market Thursday, futures moved to an overnight Globex LOD of 2033.25, which in cash terms is 2041.75ish (i.e. just a couple points above the big 2040 support). It then moved to its S1 / 2040 level and hung out there from 6:00-8:00 am; finding value. As soon as SPX opened we rose to bounce off SPX S1 and 2050 (the middle). shorts decided to hold it below 2060 for the first hour and go to test / make new lows at 2045.50, which lined up with the stop-flushing-tick that ES made around 8:35 am. SPX immediately turned around and made it known that 2050 / S1 was not going to go quietly. After three falling days (which from Monday’s high to Thursday’s Low equaled a -3.2% decrease), and being ST very…

Welcome to the Disco

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Morning Macro News

posted by CAPIS on 03/26/2015 at 7:32 am
by CAPIS on 03/26/2015

Happy Thursday to you! So! Let’s recap what’s happened with our SPX dropping precipitously. S&P futures were looking up pre-market, and I presumed it was pointing to a further increase into the EOM/EOQ to follow the Fed from last week. It ended up moving sideways most of the day, and then had a big volume move lower to Close at the lows (down -.17%). Looking at the daily chart, it appeared to form a “Shooting Star” candle, which can point to a reversal in trend (i.e. we rose form 2040 to 2115 in eight business days). SPX flirted with 2100 support the first part of the afternoon, and we rose to the PP finding resistance there going into lunch. After lunch, the market slowly made its way lower to break below 2100 and AGAIN Close at the Low of Day (LOD); down -0.61%. Again, a failure of some big supports, and also a relative “confirmation” of the Shooting Star candle from Monday. Here comes the sell-off! There was an ABYSMAL Durable Goods Orders report pre-market, so SPX started by testing the 10 & 20 DMA’s in the morning, finding some support on them and S1. It bounced twice off them to…

Happy Thursday to you! So! Let’s recap what’s happened with our SPX dropping precipitously. S&P futures were looking up pre-market, and I presumed it was pointing to a further increase into the EOM/EOQ to follow the Fed from last week. It ended up moving sideways most of the day, and then had a big volume move lower to Close at the lows (down -.17%). Looking at the daily chart, it appeared to form a “Shooting Star” candle, which can point to a reversal in trend (i.e. we rose form 2040 to 2115 in eight business days). SPX flirted with 2100 support the first part of the afternoon, and we rose to the PP finding resistance there going into lunch. After lunch, the market slowly made its way lower to break below 2100 and AGAIN Close at the Low of Day (LOD); down -0.61%. Again, a failure of some big supports, and also a relative “confirmation” of the Shooting Star candle from Monday. Here comes the sell-off! There was an ABYSMAL Durable Goods Orders report pre-market, so SPX started by testing the 10 & 20 DMA’s in the morning, finding some support on them and S1. It bounced twice off them to…

March Madness: March 23, 2015

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Morning Macro News

posted by CAPIS on 03/23/2015 at 8:41 am
by CAPIS on 03/23/2015

Good Morning! First, and foremost, today would have been my dad’s 80th birthday. My fam and I love and miss you. Now let’s talk about this market. It, once again, has proven quite resilient. The FOMC rate decision and statement focused primarily on the reduction of their Fed Funds forecast for Dec 2015 & 2016. This decrease was seen as a great thing as “everyone” (said loosely) now assumes the Fed will raise rates at an appropriate (slower) pace. We still have many hurdles ahead (wage growth, inflation, etc.) that will need to be seen for us to raise. Hopefully. Speaking of inflation, the USD (which fell precipitously post-Fed, and essentially pushed all products higher i.e. equities, treasuries, commodities, etc.) is lower again today. The dollar index (DXY) reached above 100 over the last two weeks, and since has moved lower to 97.40 currently. In tandem, the EUR was testing below 1.05 and is currently testing 1.09 from below (after a little “flash market” for it last Wednesday where it rose above 1.10 briefly after the Close). This week we are looking forward to some core inflation tomorrow with New Home Sales; Durable Goods on Wednesday; weekly Jobless Claims Thursday;…

Good Morning! First, and foremost, today would have been my dad’s 80th birthday. My fam and I love and miss you. Now let’s talk about this market. It, once again, has proven quite resilient. The FOMC rate decision and statement focused primarily on the reduction of their Fed Funds forecast for Dec 2015 & 2016. This decrease was seen as a great thing as “everyone” (said loosely) now assumes the Fed will raise rates at an appropriate (slower) pace. We still have many hurdles ahead (wage growth, inflation, etc.) that will need to be seen for us to raise. Hopefully. Speaking of inflation, the USD (which fell precipitously post-Fed, and essentially pushed all products higher i.e. equities, treasuries, commodities, etc.) is lower again today. The dollar index (DXY) reached above 100 over the last two weeks, and since has moved lower to 97.40 currently. In tandem, the EUR was testing below 1.05 and is currently testing 1.09 from below (after a little “flash market” for it last Wednesday where it rose above 1.10 briefly after the Close). This week we are looking forward to some core inflation tomorrow with New Home Sales; Durable Goods on Wednesday; weekly Jobless Claims Thursday;…

NFP Friday: February 6, 2015

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Morning Macro News

posted by CAPIS on 02/06/2015 at 9:39 am
by CAPIS on 02/06/2015

TGIF! So the SPX has slowly made its way back up to the 2014 Close / 2050-2060 area (Click on my “SPX Current” chart below for a zoomed in view). The daily chart printed a doji on the first day of the year (1/2), tested it from below on the 8th, then again on the 22nd, and now yesterday. To note, the 22nd was the highest Close this year at 2063.15. If one is to posit that this sideways nowhere-ville will continue, then one can “predict” that we’ll see another drop like we have in every other instance this year. THAT being said…  eventually trends stop.  So let’s see what kind of boom they bring. If it’s weak and we drop, look for support near the 50 DMA at 2044 (just below S1) with big selling pressure taking us to S2 around 2036 (where the 5 DMA will be). If it’s strong and we pop, then look for resistance at 2075 (where R2 is). I will say, it would be a relative “win” if we’re able to close flat to positive today, as it’s counter to what we’ve seen recently. I, personally, think there’s a fantastic chance NFP spikes… and if there’s EVER a…

TGIF! So the SPX has slowly made its way back up to the 2014 Close / 2050-2060 area (Click on my “SPX Current” chart below for a zoomed in view). The daily chart printed a doji on the first day of the year (1/2), tested it from below on the 8th, then again on the 22nd, and now yesterday. To note, the 22nd was the highest Close this year at 2063.15. If one is to posit that this sideways nowhere-ville will continue, then one can “predict” that we’ll see another drop like we have in every other instance this year. THAT being said…  eventually trends stop.  So let’s see what kind of boom they bring. If it’s weak and we drop, look for support near the 50 DMA at 2044 (just below S1) with big selling pressure taking us to S2 around 2036 (where the 5 DMA will be). If it’s strong and we pop, then look for resistance at 2075 (where R2 is). I will say, it would be a relative “win” if we’re able to close flat to positive today, as it’s counter to what we’ve seen recently. I, personally, think there’s a fantastic chance NFP spikes… and if there’s EVER a…

SPX Dividend Yield vs. 10-Year Yield

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Morning Macro News

posted by CAPIS on 02/05/2015 at 12:36 pm
by CAPIS on 02/05/2015

I sent a little blurb to my desk and wanted to share with you. There are many a pontificator whom have already stated this over the last month (Bespoke comes to mind), but I wanted to enter the fray with my own 2 cents. Here’s a chart of the SPX from 1995-2015. –  White line is SPX price. –  Green line is 10-year yield. –  Purple line is SPX dividend yield. –  Spread on SPX div vs. 10-year yield shown in bottom pane. As you can see, over the last 20 years, anytime the SPX dividend yield has been higher than the 10-year note yield, it has been a preamble to a significant rise in the SPX. The last time we had this phenomena, besides the two you see in 2009 and 2012-2013, was 1962. Below is a chart of the SPX from 1960-1970. Basically, while each time we’re a different picture / economy, etc., there’s historical precedence to buy SPX / risk assets at these times for the long-haul (even at these inflated price). Of course… timing is everything. And these three instances all depict moments of interesting political and economic turmoils (President Kennedy steel crisis in the early 60’s; Financial…

I sent a little blurb to my desk and wanted to share with you. There are many a pontificator whom have already stated this over the last month (Bespoke comes to mind), but I wanted to enter the fray with my own 2 cents. Here’s a chart of the SPX from 1995-2015. –  White line is SPX price. –  Green line is 10-year yield. –  Purple line is SPX dividend yield. –  Spread on SPX div vs. 10-year yield shown in bottom pane. As you can see, over the last 20 years, anytime the SPX dividend yield has been higher than the 10-year note yield, it has been a preamble to a significant rise in the SPX. The last time we had this phenomena, besides the two you see in 2009 and 2012-2013, was 1962. Below is a chart of the SPX from 1960-1970. Basically, while each time we’re a different picture / economy, etc., there’s historical precedence to buy SPX / risk assets at these times for the long-haul (even at these inflated price). Of course… timing is everything. And these three instances all depict moments of interesting political and economic turmoils (President Kennedy steel crisis in the early 60’s; Financial…

Which Way Wednesday: February 4, 2015

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Morning Macro News

posted by CAPIS on 02/04/2015 at 10:09 am
by CAPIS on 02/04/2015

Good Wednesday Morning to ya! This is my first post directly into our new website, so bear with me as to look and feel. I’ll intentionally keep it short(er) than what I typically do, but hopefully you find the new structure of the comments and charts easier to manage. If you do have suggestions, comments, critiques: by all means please let me know. So Monday the SPX made a new Low of Year (LOY) near the 200 DMA on the daily chart, and had a nice bullish candle off lows to close near 2020. Tuesday saw more of the same with us gapping higher, stair stepping lower to test the 10 and 20 DMA’s for support into lunch, and then lifting off again to test R2 and the monthly R1 into the Close. We settled almost on our High of Day (HOD); up 1.44% to 2050.03. That’s two days in a row of positive 100 bp moves, and we’re now 8 points shy of going positive (again) for the year (2014 Close is 2058.90). Even with the negative January Close (down -3.10% to start the year) we are now just a hair off positive on the year. February has started off…

Good Wednesday Morning to ya! This is my first post directly into our new website, so bear with me as to look and feel. I’ll intentionally keep it short(er) than what I typically do, but hopefully you find the new structure of the comments and charts easier to manage. If you do have suggestions, comments, critiques: by all means please let me know. So Monday the SPX made a new Low of Year (LOY) near the 200 DMA on the daily chart, and had a nice bullish candle off lows to close near 2020. Tuesday saw more of the same with us gapping higher, stair stepping lower to test the 10 and 20 DMA’s for support into lunch, and then lifting off again to test R2 and the monthly R1 into the Close. We settled almost on our High of Day (HOD); up 1.44% to 2050.03. That’s two days in a row of positive 100 bp moves, and we’re now 8 points shy of going positive (again) for the year (2014 Close is 2058.90). Even with the negative January Close (down -3.10% to start the year) we are now just a hair off positive on the year. February has started off…

January 23, 2015

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Morning Macro News

posted by CAPIS on 01/23/2015 at 7:05 am
by CAPIS on 01/23/2015

Well yesterday’s action was excellent post the ECB QE announcement. The general facts are that it will be €60B / month, for 18 months (about €1.1 trillion), with 20% mutual risk sharing in the hopes that deflation can be avoided.  Now! What this does for our markets is really different. Basically this allows for more carry trading as JPY & EUR get weaker and investments move to “less risky” risk assets (i.e. US assets). I think oil futures would be higher, but because the USD is strengthening so much it’s finding it hard to climb.  SPX, yesterday, opened at 2040 and found immediate selling to test the PDC level, and then the Pivot Point (PP) at 2027.48 (the upward sloping 5 & 10 DMAs were there too on the daily chart). The market found its mojo again as selling abated and buyers rushed in at better than PDC prices. We climbed and rose above R1 (where the 20 & 50 DMAs on the daily chart were) to test 2050 from below where we found some resistance during lunch. That was quickly washed away as buy-stops were hit on shorts in the afternoon, and the market squeezed higher to test, and…

Well yesterday’s action was excellent post the ECB QE announcement. The general facts are that it will be €60B / month, for 18 months (about €1.1 trillion), with 20% mutual risk sharing in the hopes that deflation can be avoided.  Now! What this does for our markets is really different. Basically this allows for more carry trading as JPY & EUR get weaker and investments move to “less risky” risk assets (i.e. US assets). I think oil futures would be higher, but because the USD is strengthening so much it’s finding it hard to climb.  SPX, yesterday, opened at 2040 and found immediate selling to test the PDC level, and then the Pivot Point (PP) at 2027.48 (the upward sloping 5 & 10 DMAs were there too on the daily chart). The market found its mojo again as selling abated and buyers rushed in at better than PDC prices. We climbed and rose above R1 (where the 20 & 50 DMAs on the daily chart were) to test 2050 from below where we found some resistance during lunch. That was quickly washed away as buy-stops were hit on shorts in the afternoon, and the market squeezed higher to test, and…

January 21, 2015

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Morning Macro News

posted by CAPIS on 01/21/2015 at 6:56 am
by CAPIS on 01/21/2015

The SPX opened higher with futures, and immediately made their HOD at 2028.94. We fell the first 30 minutes below PDC to test 2010 support / SPX Pivot Point (PP). After the Initial Balance (first hour range) was set, the market decided to test below the IB to 2005 (which was 2000 and the PP for ESH5).  From there the selling pressure was exhausted and we went back to value at 2010. After hanging through lunch, Mr. Market decided to take a few steps higher to test, and break through with buy-stops, PDC. 2025 resisted into the Close, and we settled slightly higher by 0.15% to 2022.55.  All in not a bad recovery off lows to positive, with resistance at the 150% extension level, from the financial crisis, of 2030.74, but also not a resoundingly bullish move either. The market is basically finding support slowly and is hanging near flat ST (the 5/10/20 DMAs), MT (50 & 100 DMAs), and LT (200 DMA) trend lines.  As I stated Tuesday, 2000 is holding so far and let’s see if earnings / ECB can push us to the 2050 level again, with a test of the 2014 Close @ 2058.90. To Note:…

The SPX opened higher with futures, and immediately made their HOD at 2028.94. We fell the first 30 minutes below PDC to test 2010 support / SPX Pivot Point (PP). After the Initial Balance (first hour range) was set, the market decided to test below the IB to 2005 (which was 2000 and the PP for ESH5).  From there the selling pressure was exhausted and we went back to value at 2010. After hanging through lunch, Mr. Market decided to take a few steps higher to test, and break through with buy-stops, PDC. 2025 resisted into the Close, and we settled slightly higher by 0.15% to 2022.55.  All in not a bad recovery off lows to positive, with resistance at the 150% extension level, from the financial crisis, of 2030.74, but also not a resoundingly bullish move either. The market is basically finding support slowly and is hanging near flat ST (the 5/10/20 DMAs), MT (50 & 100 DMAs), and LT (200 DMA) trend lines.  As I stated Tuesday, 2000 is holding so far and let’s see if earnings / ECB can push us to the 2050 level again, with a test of the 2014 Close @ 2058.90. To Note:…

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