The Sellers Are Kicking Off the Action This Quarter
The second quarter of 2024 is here, and so far the sellers are running the table. Bonds are selling off and the prospect of a 5% 10-year Treasury yield looks closer than it has in a long time. Investors there have made their decision on inflation. Stocks are bleeding out, too, led by the tech…
Bond Yields Break Out… And This Energy Trade Just Exploded
Equities had a decidedly mixed day - just three of 11 S&P 500 sectors finished higher by 4 PM. The energy sector, as tracked by the XLE ETF, was one of those standouts, and it’s easy to see why: Geopolitical risk and tension is continuing to increase, and supply is getting thin. Oil in particular…
Complacency, Inflation, and Time for a Hedge
—Inflation in-line but not dead —anemic volume at the end of the quarter —NVDA and tech squeeze full stop —XLK under performs INTC, AAPL, TSLA —correlation higher —financials and energy —watching retail —time to hedge SPX Expected Move -- --last week -- 54.11 (4--day expected move) --next week-- 62.52 (5--day expected move)
NVDA Double Top Formation Impacts Everything
It has been apparent to most investors that AI and specifically NVDA has driven markets to record highs. NVDA is finally showing signs of slowing and even a potential trend reversal pattern, a double top. If the Double Top is confirmed, we expect correlated moves in indexes and individual stocks. Today we discussed the potential…
This will Determine the Next Move for Stocks
Market radar is strongly honed in on the bond market right now. Whether it breaks to the upside or downside will likely be a major determining factor in terms of sector leadership in the stock market. Will growth, tech, and communications continue to outperform or will we start to see the inflation trade reignite in…
Vol Markets Flash First Warning Since December as NVDA Tests High
One of the sources of fuel for a market rally is volatility selling. However, it's the selling that ultimately leads to the last squeeze higher before the fall. Looking at term structure of volatility and skewness is a way to identify volatility expectations and hedging. Over the past few days, these vol-based indicators have been…
These Indicators Signal a Change Coming to the Markets
I’ve been absolutely pounding the table on this for more than a week now. The correlation between Big Tech market leaders and the S&P 500 is getting stronger, not weaker. And that means a correction will be knocking on the door any second now. Higher SKEW and much lower volatility points to that. Low options…
Three Stocks to Trade for Three Rate Cuts
The infamous Fed Dot Plot showed most committee members are forecasting three rate cuts in 2024. For those of you who’ve been hiding out in the woods since 2009, rate cuts can act like rocket fuel for many, many stocks… and poison for others. And we could get three hits of it this year. And…
The Fed Just Delivered Some Irrational Exuberance of Its Own
Another Fed Day has come and gone… and what a dud. Not only has the S&P 500 fallen off its daily highs, but - big picture - the central bank has completely failed to curb inflation. That’s despite all the cheerleading they’ve done over the past, I dunno, three years. More to the point, that…
Powell Could Spoil the Fun as Stocks Coil Near All-Time Highs
We’re seeing some powerful sector rotation just under the surface of the market… There are huge opportunities to profit now in energy, basic materials, the industrials, and consumer staples. That’s the good news. The perhaps-not-so-great news is that we’re now seeing the kind of price action typically witnessed in later stages of the equity market…