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Brian's Wednesday recap: Energy goes along for the ride; setting a floor for AAPL; the bullish EW case

Brian Shepard

The German business morale drops for the second month in April to 104.4 from 106.7 in March. The ECB is readying a rate cut or so traders and investors feel following the latest continental data read. However, the German data was below the most dire forecast. The austere ways of the ECB may be joining the rest of the globe in the inflation trade. What else is a central banker to do?

Israel has said that Syria has indeed used chemical weapons on its people. However, Secy. of State John Kerry has said that evidence must be overwhelming for that line in the sand to be crossed. It is surprising how long Assad has held onto power. We have thought he would be long gone by now. We cannot imagine what the prize is. But the energy markets are feeding off the rush to the feed trough in the equity markets. As long as they stay ebullient so too will the energy complex - posted by Stanton Analytics at (06:47a.m. CT).

The Day Trading Maestro Tim Haefke - A MrTopStep Webinar this Saturday, April 27  http://bit.ly/17Oldhp 

Some [AAPL] valuations based on the dividend: (uses a conservatively calculated WACC of 8.5%) - with 5% annual dividend growth AAPL has an intrinsic value of $350, 6% growth = $480, 7% = $813..... (15% is unlikely to be something you would see on a perpetual basis) ---- based on a current payout ratio of 25% and ROE of 35%, AAPL could sustainably growth its dividend by 26% annually (if it repatriated all its generated cash).... using just domestic cash and debt, 10% annual dividend growth is sustainable..... this is my stab at estimating a floor in AAPL if we're going to value it like [XOM] (so my floor is $350) - posted by Jimmy Ticks.

WE ARE IN AN INFLECTION PRICE AREA today and if we go after the .786 WHICH IN SPOO terms is where the overnight PEEAN high (globex) is located at 1579 then the BULLS CONTINUE to TRACK and the BEARS are getting more and more vulnerable. NOW ONE LAST THING--BULL MARKETS do not END on 3's and the larger picture chart sent out 3/21 has all sorts of implications in it as to rather or not I see the BULL MKT as being over--I DO NOT and as stated I won’t even post a BEAR count, although one is available, looks forced, contrived, pretzel logic until 1471 is overlapped - posted by William Blount (08:29CT).

Mediocre Earnings and Revenues http://bit.ly/10dIyV8  

Harmonics from Kathy at http://structuraltrading.com/:   SPY http://screencast.com/t/hIW7HH6TlS    AAPL http://screencast.com/t/XSKpodxtx     

ES http://screencast.com/t/FMKrCtQDWUy     NQ http://screencast.com/t/x2Hfe0Qfgm     CL http://screencast.com/t/kEIBGdJXs

Monday’s S&P 500 trade started with 320k ESM traded on Globex, trading range was 1571.60 – 1579.10. Tuesday’s regular trading hours (RTH’s), pit session trading range was 1574.60 – 1560.00 before settling at 1573.60, up 17.7 handles. At (08:20CT) John Monaco posted the opening NYSE imbalance was 70% to the BUY SIDE following another batch of modestly better corporate earnings.  

The regular trading hours opening range was fractionally higher at 1573.80 – 1574.20, traded 1573.20 and printed a high of 1577.00 before fading back to 1571.00 at 9:23. Sideways to higher trade, 1575 area light volume set in through the European close. The Russell 2000 [RUT] was the market leader, but overall it was a consolidation day in the making. There was chatter about the RUT converting both the 50 and 20 EMA yesterday at 921.86 and 926.11 respectively. Over the last 2 weeks both the bulls & bears alike chatted up that the RUT had lagged in front of last week’s pullback. The bulls would prefer to see swag come back to the RUT. At 12:00 the 1573.50 area was trading and by 1:30 the SPM was retesting the morning high of 1577 before topping out at 1578.30 by 2:00. At (14:02CT) William Blount reminded us 1584.24 is the .786 and that is the FVA-adjusted 1579 (FVA=fair value adjusted). The 1575 area was trading when the closing imbalance showed the NYSE with 50% - 50%. On the cash close the SPM future traded 1574 area before settling at 1574.10, up .5 handle 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.