Collective Intelligence!
The concern remains economic expansion, growth. We get a number of economic and corporate earnings reports this week that should give a good look at the current growth picture as well as the housing market. So far, it would be a stretch to foresee the current economic pace continuing, without a pickup in the coming data. A number of corporations have scaled back their forecasts and the previously leading economic sectors are showing a slowdown. The Fed, Ben Bernanke standing ready.
What we were seeing this morning:
- Growth concerns continue and cause both the LO and HF flows to be better for sale
- HF community back shorting (focus on Technology & Basic Materials) > shorts are much more comfortable staying short after last week vs. YTD
- Russell continues to underperform = growth indicator
- Existing Housing results were weaker = continued selling of this crowded long
- CAT after trading up post CC, now down on the day
- Commodity selling continues
- Volumes on this selloff are less active vs. last week
- Yen weakness this morning reversed
- Treasury catching a bid
Nigerian military and Islamic extremists engaged in fighting that has caused the deaths of at least 185 people over the weekend. The government forces were locked in a battle with the Boko Haram. This along with pipeline theft in the south has caused the slippage of oil exports from the country. The recent force majeure on Bonni crude from Shell is an example of an export cutback. As we reported last week, the Saudi Manifra oil field is coming on line. It will produce 500k b/d by July and 900k b/d by 2014. However, the market continues to be buoyed by calls for an OPEC meeting by the hawks, Iran and Venezuela. This started bottom fishing Friday and with a slightly weaker dollar continues through to the upside Monday. The group has scheduled a conference in May - posted by Stanton Analytics. Also, Stanton Analytics aka Henry's morning crude chart. http://t.co/fBRgBguZeD
Existing home sales disappoint: WSJ saying prices jumped 12% biggest since 2007--- volumes down b/c prices up not a bad report. http://on.wsj.com/15BPUtP
[NFLX] earnings tonight, straddle pricing 15.5% move in spot, historical mean move 20.5%, last 3 reports (+42.2%, -11.9%, -25%) posted by JimmyTicks. MASSIVE call volume on [NFLX] WEEKLIES TODAY posted by Bob Lang. Where there is smoke there is fire, part 1....NFLX beats estimates post close.
[AAPL] may have returned more than 5-8M units of defective iPhones to Hon Hai in March. Commercial Times reported that 5-8mn units of defective iPhones were returned by AAPL on Mar 15, 2013 and that it may cost RMB 1-1.6B to reforge. It is said iPhone production resumed on Apr 15, with daily output at 1-2k units and only 95% yield.
REPORT OUT OF CHINA THAT MSCI IS CONSIDERING INCREASING THE WEIGHT OF CHINESE A STOCKS TO 17% IN THE INDEX AND A TOTAL WEIGHTING OF CHINESE STOCKS TO 30%...Potential to influence weighting and Flows of ETF / Country Funds
Harmonics from Kathy at http://structuraltrading.com/: ES has returned to trendline b/o pt to test as support, premkt chart: http://screencast.com/t/TBUnCylM current chart http://screencast.com/t/UeiDth85E CL requires a bounce into 88.56 to 88.9 region for right shoulder & a leg for potential Deep Crab BC leg premkt chart http://screencast.com/t/nk2sPXy93 current chart http://screencast.com/t/FxnhUaHFseXo NQ, premkt chart said a hold above 2775.5 has 2827 tgt w/ scaling pts 2791.25 & 2806, 2791.25 tgt hit, price attempting to get to next tgt, premkt chart http://screencast.com/t/T6dhZHV3XbE9 current chart http://screencast.com/t/xsPigoshU
Monday’s S&P 500 trade started with 247k ESM and 1k SPM traded on Globex, trading range was 1556.90 – 1548.40. Friday’s regular trading hours (RTH’s), pit session trading range was 1550.80 – 1536.50 before settling at 1547.60, up 13.6 handles. At (08:27CT) John Monaco posted the opening NYSE imbalance was 75% to the BUY SIDE. So far, the corporate earnings have checked in mixed and the economic data has softened. Goldman commentary out this morning stating that 2016 will be the year the Fed raises. Also all eyes should be on the global flash reports starting tonight with China an end with the U.S. pre-market tomorrow.
The regular trading hours opening range was 1553.50 – 1553.00, traded up to 1555.20 down to 1549.30 before trading sideways to modestly higher. At (08:41CT) redliontrader pointed out the S&P 500 was leading the downside in the advance/decline, A/D ratio race -2.7:1 as a new low of 1547.50 printed in the SPM, big S&P at 8:50. By (08:55CT) the A/D race was changing leaders as the Russell 2000, [RUT] was leading the decline -4.27:1, NYSE -1.67:1. At 1550.50 trading 9:00CT the existing home sales disappointed, checking in at 4.92 vs survey of 5.01M, and new lows followed. [IBM] was lagging, [MSFT] was strong, talk of a $4bln notional buyer in MSFT shares, calls were also active, as tech was outperforming. There was also chatter MSFT to take over [NUAN]. MSFT traded its daily average call volume in under 30 minutes, delta was very positive, call premium was being bought in a major way.
Where there is smoke there is fire, part 2...it was later announced that Valueact Fund makes $2Bil investment in MSFT. 1544.50 by 9:12 down 3.1 handles while Nasdaq was 11 handles and was followed by a new daily low of 1542.80 at 9:36. A big buyer in SPX May 1600 C - paper paid 2.90 for 13,500. At (10:14CT) redliontrader pointed out there were 94 NYSE new highs..they are still buying quality and the SPM was retesting / double topping at the 1555.20 morning high at (11:41CT) everyone was squeezing higher now, OEX Put/Call ratio +2:1. At 1:40 the daily high of 1560.50 traded before fading back to 1558 area. The 1558 area was trading when the closing imbalance showed 80% SELL SIDE ON THE CLOSE. On the cash close the SPM future traded 1557.30 area before settling at 1555.90, up 8.3 handles on the futures close.
Brian Shepard is a 20-year exchange member of the CME Group.
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DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities.
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