Archive for the ‘Chart of the Day’ Category

GE Lifting

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Shares of GE are showing signs of life as the new year begins.  The stock is up over 2.5% this morning and is trading well above last week’s high.  The ‘quiet’ bottom that’s been forming since the mid November selling climax appears to be solid enough to support a significant rebound.  At last week’s low GE was down over 45% from its 2017 peak and was at its deepest oversold reading(weekly MACD)since the 2009 lows.  Also working in GE’s favor of late is a rather robust wave of call buying.  Here’s Bob’s take on the action:   Solid activity in the weekly (Jan 5th) 18 calls around $.12-.13 and also in the regular Jan 18 calls around $.25-30, both dates seeing over 18,000 contracts each. To a lesser degree, some interest in the Jan 12th expiration 18 calls between $.20-25 to the tune of approx. 5,000 contracts. Bulk of trading activity across the GE Spectrum has been in call buying.

We are long GE in most managed accounts. 

 

TNX (Weekly)

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Growth vs. Value

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Growth outperformed value dramatically in 2017.  It’s unlikely this will continue in the new year. 

Great chart from @Bamabroker

AAPL

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New Home Sales Still Soaring

From the desk of Charlie Bilello:  New home sales come in at 733k, highest since July 2007.

Fed Funds Rate in July 2007: 5.25%.

Fed Funds Rate Today: 1.25%-1.50%.

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Copper Cruising

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Copper has had a fantastic run during the second half of December.  Wednesday marked Dr. Copper’s 15th straight gain, its longest streak in history.  Impressive. 

What is Dr. Copper telling us?  Investopedia.com defines: 

Market lingo for the base metal that is reputed to have a Ph.D. in economics because of its ability to predict turning points in the global economy. Because of copper’s widespread applications in most sectors of the economy – from homes and factories, to electronics and power generation and transmission – demand for copper is often viewed as a reliable leading indicator of economic health. This demand is reflected in the market price of copper. Generally, rising copper prices suggest strong copper demand and hence a growing global economy, while declining copper prices may indicate sluggish demand and an imminent economic slowdown.

Hat tip Charlie Bilello

Will Gold Miners Come Alive Next Month?

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The GDX is finishing off an impressive rally as the year comes to an end.  The Gold Miners ETF will close above its November high as it extends the rally off major support($20.90-$21.50)to a 9% gain.  A significant bottom may now be in place and a big follow-through move in January is looking very likely. 

There’s been some very interesting option action of late as well.  Bob von Halle sums it up:   Beside retailers, I can’t think of a more hated sector in 2017 than gold miners (as represented by the GDX ETF…names like ABX, GG, NEM, etc). For the most part, GDX has been stuck between $21.5 to $23.5 for past 12 months (currently $23.35), with an occasional spike up to $25, only to be met with a sudden and painful retreat. Moreover, the sector has vastly under performed its underlying commodity, gold,  for much of that period, especially recently. That is despite a 2 year period of dramatic balance sheet improvements, project rationalization, cost cutting, financial discipline and extensive hedging programs for most of the major names in the sector. Therefore it was interesting today to see over 22,500 of the Feb 25 calls get bought up at $.23 on the last trading day of the year. Perhaps this is simply a hedge against a short position in the stock…no real way to know for sure. Moreover, my TWTR feed is still rife with negative commentary about the impending implosion of the GDX, so nothing has appeared to change on the surface. But the trade (along with gold passing the $1,300/oz level today) has my contrarian instincts on alert. Perhaps 2018 will be the year of bounce back for the miners, just when no one seemed to be expecting it?

At time of publication we do not have a position in the GDX.

Netflix Update

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NFLX is trading quite well today.  Shares are up over 3.5% putting it in the number 3 spot on the S&P 500’s top gainers list.  Volume is running very heavy compared to the usual light holiday trade.  This impressive move is pushing the stock to new December highs.

NFLX has been struggling since falling below its 50 day moving average a month ago.  The stock took out of a key support zone near $191.00 that same day as selling pressure accelerated.  For the next four weeks shares have traded in a narrowing range just below the 50 day moving average.  Today’s robust action may indicate the pullback has ended and a fresh rally leg is on the way.

We now consider NFLX a low risk buy near current levels.  It would take a close below $184.00, which would violate last week’s low, to return shares to range bound action.  On the upside a key hurdle will be an overhead trend line that links the October and November highs.  Once this area is convincingly taken out NFLX has plenty of room to run.

We remain long  NFLX in some managed accounts.

Macy’s Attracting Significant Put Buying

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Macy’s has had a great run since its last earnings report(Nov. 9).  At this week’s high the stock has gained over 55% from the November lows.  This impressive move has left behind layers of support including the summer highs as well as the 200 day moving average.  How are option players now positioning themselves following M’s huge rebound?  Bob von Halle takes a look:

Significant put buyers in out of money M puts….with stock around 25.3, over 6,000 of the Jan 22 puts have been bought for around $.25 and also over 6,000 Jan 21 puts bought for approx. $.15….that is some serious hedging taking place at this time of year. Stock has had a very strong run over past few weeks (up from $19 zone) as market got more comfortable being long retailers. Earnings for the Dec quarter are not out until late February, well past the expiration of these put options, so some one fears significant downside prior to that date.

At time of publication we do not have a position in M. 

Gold (Weekly)

Testing resistance at 1300 again.

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