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Futures

Bill Baruch breaks down the markets ahead of today's FOMC minutes and oil inventories


Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Visit our website at www.bluelinefutures.com to open an account and stay up to date with our research.

Bill Baruch is President and founder of Blue Line Futures. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications. 

Blue Line Futures is a leading futures and commodities brokerage firm located at the Chicago Board of Trade. We work with clients that range from institutional to professional to novice and from self-directed to broker-assisted. No matter what type of trader you are, our mission is simple; to put the client first. This means bringing YOU strong customer service, consistent and reliable research and state of the art technology. 

This article is from Blue Line Futures and is being posted with iBlue Line Futures’ permission. The views expressed in this article are solely those of the author and/or Blue Line Futures and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


16477




Macro

The Hammerstone Report - Mid Morning Look


Wednesday, February 21, 18

U.S. equities are higher, bouncing after yesterday’s late day pullback where nearly every S&P sector declined on Tuesday, while energy one of the few standout declining groups today. Markets await news, as the Federal Reserve is due to release minutes from its January policy meeting – the last under former Fed Chair Janet Yellen – at 2:00 p.m. today. European markets slumped after weaker PMI manufacturing data points overnight in the EuroZone. Energy sector the worst performing early, with a few earnings missed and lower production views (NFX, DVN). News flow remains light, amid one weak housing data point, several earnings reports markets awaiting for direction of interest rates. Not much movement in bonds, currencies or commodities thus far, though the Sterling rises off one-week low on Bank of England policymakers' hawkish tone. Markets also await another round of U.S. debt sales after $179B was auctioned yesterday.

Treasuries, Currencies and Commodities

  • In currency markets, not much doing, with the dollar index (DXY) trading up slightly after weaker existing home sales data earlier, but markets await the FOMC Minutes form January meeting, due for release later this afternoon; Bitcoin prices tumble over 10%, drops to around $10,500 (off overnight highs $11,784); the dollar small gains vs. euro, yen and Pound early
  • Commodity prices; Precious metals with small gains, as gold trades above $1,333 an ounce, while oil prices slip slightly ahead of inventory data tonight (API pushed back 1-day due to holiday on Monday) and tomorrow morning (EIA data 11:00 AM on Thursday)
  • Treasury markets little changed ahead of FOMC Minutes from January meeting later today as 10-yr yield 2.88%; also debt prices fell after yesterday’s auction saw the Treasury sell $179 billion of fresh debt at yields not seen since 2008…with more supply on the way this week

Economic Data

  • Existing-Home Sales for January fell (-3.2%) to 5.38M, below the 5.6M estimate, while December was revised to 5.56M from 5.57M; there was 3.4 months’ supply in Jan. vs. 3.2 in Dec.; inventory rose 4.1% to 1.52M homes; median home price rose 5.8% from last year to $240,500
  • Feb. Flash Markit Composite PMI 55.9 vs 53.8 and vs. year ago 54.1; new orders rise to 58.1 vs 56.3 in January (highest reading since March 2015)

Sector Movers Today

  • E&P sector; DVN shares slide after the company posted weaker-than-expected Q4 earnings (38c vs. est. 62c) and offered downbeat production guidance for 2018; NFX shares fell to 52-week lows as Q4 production of ~170 Mboepd came in 1% above Street estimates, with oil (67.1 MMbpd) falling in-line with Consensus; CXO Q4 production of 211 Mboepd easily beat consensus by 4%, which drove a 9% EBITDA beat ($513MM vs. ~$472MM)/also laid out a plan to deliver 20% oil production growth while keeping capital outlays within operating cash flow for year; EQT approved a plan to separate its upstream and midstream businesses, creating a standalone publicly traded corporation (NewCo) that will focus on midstream operations
  • Chemicals; MOS upgraded to overweight at JP Morgan and raise tgt to $30 as the company's reduced phosphate production in the U.S. has created a positive price dynamic; CF initiated outperform at Bernstein and $60 price target as nitrogen recovery continues; KRA shares fall after quarterly earnings and in-line guidance
  • Consumer Finance and Lending; Oppenheimer said they continue to believe investors should own AXP over the next 12-18 month and ahead of the 3/7 Investor Day; LC shares slip as reiterated its '18E outlook, while introducing 1Q:18E Revenue/EBITDA guidance, 5%/$5.6M below the Street at the midpoint on higher marketing/servicing costs, and structured programs seasonality; SQ tgt raised to $52 from $40 at KeyBanc; WEX Q4 top and bottom line results beat; COF was downgraded to neutral at Nomura as sees limited room for positive revisions and a full valuation
  • Large Cap Pharma; ABBV and NBIX reported positive results for uterine fibroids drug, saying their drug met its primary endpoint in a phase III trial testing it in women with uterine fibroids; along with 4Q financial results, TXMD provided an update on plans to launch TX-004HR in 3Q18 and TX-001HR in 1Q19; DVAX rises early after hepatitis B vaccine recommendation by CDC immunization committee

Stock GAINERS

  • AAP +10%; after 4Q results beat, though posted what analysts considered conservative 2018 guidance (AZO, ORLY moved in reaction)
  • LPSN +10%; rises despite forecasts for 1Q and FY EPS that were below expectations, with analysts saying they delivered a good quarter of results and guidance
  • LZB +10%; quarterly profit down, miss estimates (due to tax reform), but sales and comps strong
  • MOS +3%; upgraded to overweight at JP Morgan and raise tgt to $30 as the company's reduced phosphate production in the U.S. has created a positive price dynamic
  • VRSK +3%; as quarterly revenue and adj. EBITDA each ~2% above consensus
  • ·WEX +9%; Q4 top and bottom line results beat, sending shares higher

Stock LAGGARDS

  • BYD -6%; 4Q EBITDA was slightly below expectations, and 2018 EBITDA guidance came in 4% below consensus at the midpoint, driven by headwinds
  • DVN -5%; after the company posted weaker-than-expected Q4 earnings (38c vs. est. 62c) and offered downbeat production guidance for 2018
  • GRMN -5%; after quarterly results
  • LHO -7%; issued below-consensus guidance for 2018
  • PTLA -8%; CHMP communicated a positive trend vote on the MAA for AndexXa and a negative trend vote for BevyxXa following oral explanations
  • RCII -7%; posted a wider than expected Q4 EPS loss of (41c) vs. est. loss (7c), a miss on revs and an unexpected decline of comps (-2%)
  • QTS -22%; after Q4 results, 2018 forecast for FFO/share and adj. Ebitda was materially below analyst estimates and announced restructuring of its sales and management teams
  • SLCA -9%; posted a Q4 Ebitda miss, along with 1Q guidance calling for volumes and pricing in Oil & Gas segment to be unchanged QoQ
  • TTS -28%; posted an unexpected 4Q loss and the first comp sales decline in several quarters, along with gross margin deterioration
  • UTHR -8%; 4Q revenue beat estimates but EPS missed on higher taxes and operating expenses

The content of this post was created by the Hammerstone Group. The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com. For more information on the stocks mentioned in the Hammerstone Recap, please contact Brian Ducey at brian@thehammerstone.com.

This article is from the Hammerstone Group and is being posted with the Hammerstone Group's permission. The views expressed in this article are solely those of the author and/or the Hammerstone Group and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


16473




Technical Analysis

Technical Take: Are hawkish minutes already baked in?


Minutes from the January FOMC meeting will be released later this afternoon.  Observers will be eyeing the dot plot to see if there is an expected increase in the number of rate hikes in 2018 to four from three.  Related to this forecast will be commentary regarding the recently implemented tax reform, as well as future fiscal policy as it pertains to infrastructure spending.  Markets appear to be expecting a hawkish release as the 2-yr Treasury yield, highly correlated to rate hikes, has been on a steep incline so far in 2018.  The yield is up more than 100bps from the September lows, but has been accelerating at a faster pace in 2018.  In January it gained 26bps, the 2nd largest monthly gain since December 2009 and surpassed only by the move in November 2016.  Already in February it is up another 12bps.  Momentum is wildly bullish with the weekly RSI reaching at an extreme 90 reading earlier this month, its highest reading in 24 years.              

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


16475




Stocks

Nasdaq Market Intelligence Desk - Equity Market Insight February 21, 2018


As of 11:17 AM EDT:

NASDAQ Composite +0.80% Dow +0.40% S&P 500 +0.54% Russell 2000 +1.12%

NASDAQ Advancers: 1656 Decliners: 547

Today’s Volume (100 day avg) -18.5%

Stocks fell over 250 Dow points yesterday and after a flattish open the major indices push to session highs.  The small & midcap laden R2K index is outperforming the other majors indicating risk-on sentiment.  Investors will be watching for the Fed minutes to be released at 2pm for a view into future Fed policy, particularly as it relates to any acceleration of rate increases.  Most sectors are higher led by industrials (+1.2%) and financials (+1.0%) while consumer staples (-0.3%) and REITs (-0.2%) trade lower.  Yield on the 10-year treasury holding in 2.89% range while the dollar is firmer for a second day.  Asian markets were mostly higher overnight but Europe is mixed. 

  • Will buybacks counter QT?  According to StreetAccount, the FT reported that buybacks may continue to provide support to equities.  It noted that the $3.5T in buybacks since 2010 coupled with the $2T in dividends over the period represents a much greater total than the Fed's entire quantitative easing plan.  While buybacks started to slow last year, trends may be on the rise and adds that Goldman Sachs' buyback desk saw its busiest week ever earlier this month as finance directors took advantage of the market's slump and the end of the earnings-season blackout.  Also, tax cut legislation may provide a further spur to buybacks.
  • On that note, Philadelphia Fed President Patrick Harker (FOMC non-voter) said that he expects job creation to remain strong and the labor market continue to tighten.  He added that while inflation is "not where we want it to be," he forecasts it will reach or exceed the 2% target by the end of 2019.  Harker noted he has penciled in two rate hikes for 2018, though he added the data could change that view. Separately, Minneapolis Fed President, Neel Kashkari claims that traders may have overreacted to the inflation data earlier this morning, send the major indices to 10% correction territory. He won’t be a voter for rate hikes this year, but he was one of the few dissenting voters in 2017 when the FOMC decided to raise rates 3 times.
  • Existing homes sales fell 3.2% in January despite analyst expectations for a 0.5% gain.  To a degree the cold weather early in the month may have been a factor, but the larger problem is a lack of inventory.  Homes available for sale fell 9.5% to the lowest level since record keeping began in 1999.  However that provides a benefit – higher prices, which increased 5.8% y/y to an median of $240,000. 
  • Garmin Ltd. and Wendy’s reported earnings before the bell with GRMN trading lower despite an earnings beat and WEN higher in initial reaction to news.  Also reporting earnings was Lending Club, which fell over 10% after earnings missed expectations. 
  • After the bell, over 30 companies will report today including ANYSYS (ANSY), Stericycle (SRCL) and Synopsys (SNPS).  More than 80% of the S&P 500 companies have reported but there are plenty more mid and small sized companies to go….

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


16474




Stocks

Wait a Minute(s)


This is an abbreviated week of trading, and the first of four sessions did not go so well for the bulls.  The major indices slumped under the pressure of Walmart's (WMT) losses, some late selling of the technology stocks, and a breach of technical support at the 50-day simple moving average for the S&P 500.

A disappointing 2-yr note auction contributed to the selling as well, having fostered concerns about increased supply and the specter of rising interest rates.

The market has a sluggish feel to it this morning.  The S&P futures are up two points, the Nasdaq 100 futures are up 21 points, and the Dow Jones Industrial Average futures are down 15 points, leaving them all trading in close proximity to fair value.

There isn't much conviction as market participants are waiting to see what comes of yesterday's pullback leading up to -- and following -- the release of the minutes for the January 30-31 FOMC meeting at 2:00 p.m. ET.

There is some nervousness that the minutes could reveal a more hawkish-minded Federal Reserve than the market has grown accustomed to dealing with since the financial crisis.

The January FOMC meeting came before the employment, CPI, and PPI reports for January, the stock market upheaval in February, and the two-year budget agreement.  Accordingly, with the market knowing what it knows now, the minutes will likely prove nettlesome if they connote a hawkish tone. 

As a reminder, Fed Chairman Powell will deliver his semiannual monetary policy report to Congress next week.  That will offer a more "current" view of matters, so it could be best perhaps if market participants tempered their monetary policy predilections until that report.

There isn't any corporate news of note pushing the tape in a meaningful way at the moment. One item, though, that will get some added attention from the business media is the news that Broadcom (AVGO) lowered its offer to acquire Qualcomm (QCOM) to $79.00 per share in cash and stock (from $82.00) after Qualcomm raised its offer to acquire NXP Semiconductors (NXPI). 

Today's economic calendar revolves around the housing market. 

Earlier, it was reported that mortgage applications declined 6.6% week-over-week, as rising mortgage rates curtailed both purchase and refinancing applications.  At 10:00 a.m. ET, the Existing Home Sales Report for January (Briefing.com consensus 5.62 million; prior 5.57 million) will be released.

Another focal point today will be the $35 billion 5-yr note auction at 1:00 p.m. ET.  Market participants are anxious to see if the demand is relatively weak again like it was at yesterday's 2-yr note auction. 

Incidentally, the 2-yr note yield, which is more sensitive to rate-hike expectations, has risen five basis points this morning to 2.27%, which is its highest level since September 2008.

--Patrick J. O'Hare, Briefing.com

This article is from Briefing.com and is being posted with Briefing.com's permission. The views expressed in this article are solely those of the author and/or Briefing.com and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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