Oil beginning to threaten SIFs

UPS announces earnings and they are terrible. FDX down in sympathy. Expect that many of the online retailers will also do poorly. If the transports roll over, it will be extremely bearish for the overall market on the basis of DOW theory. The rails will lag initially, but they will implode too if the economy slows badly. Guidance is key.

Extreme caution warranted in SIFs if you are long.

nitro
 
Oil breaking out. This does not bode well for several more rate cuts (one more maybe). Markets sensitive to energy adjusting for it.

We are in a huge trading range. Everything between 1292 and 1392 SPX is range trading.

As stated yesterday, put the transports on your screen.

nitro
 
BOE lowers rates a 1/4 and appears dovish. It is no wonder England chose not to adopt the EMU. In addition, the FED target imo going to no less than 2% barring Armageddon.

I am going to go out on a limb and suggest that we have seen an intermediate bottom to the dollar. The only worry imo are the Asian currencies which will likely continue to strengthen. But perhaps more importantly, I think oil has maybe $3 higher and $30 lower from here. If there were lines at the gas stations, I would say oil goes to $120 to $150. There are no lines. Therefore, we can surmise the price of oil futures is less driven by demand and more by speculation. Notice, this is thinking about markets and not listening to them - a dangerous thing to do.

What does this mean for SIFs? Since energy is now something close to 12% of the components of the SP500, it will have negative impact on the index overall. However, oil sensitive stocks (consumers of oil) are probably a buy real soon imo. This bodes well for the transports on that time frame.

nitro
 
Yikes!

GE misses, and it doesn't just miss, it misses big for GE. If you trade SIFs you stand up and take notice if GE misses by a penny, and it missed by .07 :eek: Extreme caution warranted if you are long, not just today, but through the entire first quarter earnings season.

Any company that doesn't have exposure to the international market is going to be a disaster. If you comb through coming earnings and do a little thinking and put on aggressive but limited risk option positions on, it is worth your year. IV on the earnings option play is probably way too low for most of these companies. This is a gift quarter as far as trading earnings go. Every CEO is going to want to mark down all at once and this is the quarter to do it, capiche?

1350 SPX will be tested today. It could be a very bad day for bulls.

nitro

BTW, if they whack GE, imo buy small shares into the selloff if you have a time frame of anything but a short term trader.
 
Quote from nitro:

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I would be buying XLF puts here, or you can wait if you want till 1392 SPX, but your risk losing the trade for a few handles. XLF has two gaps to fill now.

nitro
More...
XLF will fill at least one of the gaps today. I doubt it fills both. Probably taking some profits on the first gap fill on half of position is prudent.

nitro
 
SIFs somewhat surprising, imo they should have gone and stayed red after the inflation numbers announcement.

After the inflation numbers, FFFs collapsed and now have 28% of a chance of a .50 cut. Granted, no one ever believed that we were getting a .50 anyway, but still...The market is trading not on the rate cuts anymore, but on how long the rate stays low. The markets believe the FED will leave IRs low longer than I think they will. Too hard to gauge as it is so complex a scenario to make an argument either way, but oil prices (indirectly a dollar play and therefore an IR play) is the confirmation for this idea.

Earnings season has always felt like walking a minefield. This one is no different.

Oil futures to new highs. I am not surprised. Still well within the $3 up and $30 down scenario. I would not be surprised to see $115. Dumb money buying oil at these levels imo.

nitro
 
The only comment worth making today is that the volume, even on big rallies, is tiny. It is almost as if 50% of normal market participants are not involved in any of this trading, or alternatively they are, but on tiny shares. Tiny shares is more likely than no participation at all imo.

There appears to be a great deal of discipline by market participants on the longer time frames.

Oil, what can I say. If it is not one thing it is another. Mexico, Russia, OPEC, inventories, blah blah blah. It is all a bunch of crap. Its ascent is 85% dollar weakness related. Euro to new highs. Asian currencies even when they go down in the short term are going to get stronger in the longer time frames. One rate cut from the EU or one rate raise from the FED, and QM has the worst day ever.

I am going to put the Swiss Franc/Yen spread on my screen on something I heard yesterday that was very interesting. Not sure what it is worth technically yet.

nitro
 
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