Tag Archives: Oil

I Bubble Bubble

After catapulting to an eye-watering all-time high last week with catalysts coming from mergers and component companies’ positive drug test results, the IBB biotech index suffered its biggest loss in months, dropping 4.1% and dragging the Nasdaq down to a 118 point plunge, the biggest one in almost a year just after it finally breached the 5,000 level for the first time in 15 years since the tech bubble burst. Semiconductors also got slammed and were the other contributing factor to the Nasdaq nosedive. BIS has been an excellent trader to capitalize on this biotech correction, having bounced off an all time low of $29.18 last week. I managed to pick this up at $30.40, sold at $32.00 and got back in at $31.55. I scaled out again today at $34.55 and $34.10. It closed strongly but I am expecting a bounce in the IBB before we see whether the trend has actually reversed or if this is just a correction.

Interestingly, steels (AKS, X, STLD) bucked the trend (or at least outperformed the indexes) and continued to bounce after getting hit by lower guidance last week.

And just when you thought crude oil was going to have a quiet day after barely a peep on larger than forecast inventories, it staged a huge rally right before the final hour of pit trading at 13:20ET. GASL was a major beneficiary of this turnaround, up 8.8% to hit a multi-week high of $3.21. After hours crude leaped another 5.4% to $51.91 on news of Saudia Arabia launching airstrikes in Yemen.

FB faltered after a 7 day winning streak that tacked on 10%, briefly dropping below $83 before recovering slightly as Mark Zuckerberg kicked off the F8 2-day developer conference. There has been a lot of bullish call buying in this name in recent weeks and we will see if that continues. I closed some puts at a tidy profit this morning but sold far too early it seems, and started nibbling on some calls.

And it seems like every day is Friday for AAPL these days, as it suffered a massive $3.31 gutting on seemingly no news. Unfazed, some bullish posters on StockTwits continue to call for $130+ within a few days. I guess if you consider a +$0.30 bump in after-hours ‘panic buying’ and ‘shorts getting annihilated’, then anything in your mind is possible…#hopespringseternal. Also took profits on puts here and opened some calls, so let’s see if we get a bounce off these levels.

As always, trade well and stay disciplined!

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A Slippery Inflection Point

On the back of falling rig counts and a technical oversold bounce oil has staged a vigorous two-week rally, climbing 22% off its 5 year lows of $43.58 on January 28. Bears are calling for a continued downtrend with this recent move being only a dead-cat bounce, whereas bulls find encouragement in the price holding above $50 for the first time in weeks. Personally I would enjoy an extended period of cheaper gas as prices at the pump have jumped correspondingly in the last couple of weeks, and it would also give me the opportunity to pick up some beaten down oil majors paying fat dividends, like CVX, TOT, or the XLE ETF. Junior oils have also staged a breathtaking surge in plays like OAS and GDP, as well the XOP ETF. Another interesting ticker to watch is FCG , tracking oil & gas producers and explorers (holdings here) and its 3x leveraged cousin GASL, which have bounced sharply after hitting all-time lows recently. The energy sector has lifted broader indices in US markets, and has also thrown a lifeline to the ailing Russian market as shown by the strength in RSX, RUSL. A strengthening ruble has also helped. DWTI and UWTI are still trending and in play with this oil volatility still at the forefront.

As always, trade well and stay disciplined!

 

Whipsawing Lower

PCLN hit a milestone today, although a bearish one, as it plunged through the $1,000 level for the first time since October 2013. January 1000 monthly put options expiring on the 17th (technically tomorrow) skyrocketed from a low of $0.55 to a high of $10.60 before closing at $8.70, representing a 625% return overnight! Many other momentum names have fallen through key levels this week, including AMZN, AAPL, BABA, GPRO, NFLX, and TSLA.

Even ‘Turnaround Tuesday’ could not save the broader indices as an initial rally was quickly sold off, with the S&P 500 down again today for the fifth straight day, closing 52 points lower since last Friday at 1,992. The 30-year yield has also been cratering all week as evidenced by fresh highs in TLT. And the VIX has been hovering above the 20 level for the 3rd day in a row.

There were a couple of monster moves in commodities, notably natural gas, which surged almost 10% yesterday after already being up 5% the previous day off year lows. After this morning’s EIA inventory report it continued to rally briefly before giving back some of the week’s gains. The other big gainer was gold, up over $30 this morning as it breached the $1,250 level, reaching a high of $1,267 before settling just below $1,260. The catalyst for this appeared to be the Swiss National Bank’s decision to unpeg the Swiss Franc from the Euro, causing the franc to jump 30% vs. the Euro and 25% vs. the USD before paring some gains. FXF would be the ETF vehicle to trade this if you are so inclined. And of course, what week would be complete without volatility in oil? WTI crude rallied briefly above $51 before settling sharply lower at $46 today. For the strong of stomach DWTI has been an excellent ‘buy the dip’ tool to ‘sell the rip’ off any spikes in the commodity at this point, hitting a low of $144.81 this morning before closing near the HOD of $174.55.

With monthly options expiration tomorrow expect another volatile day as Goldman Sachs caps off a week of financials reporting disappointing results with BAC, C, JPM and WFC having all taken a beating. As always, trade well and stay disciplined!

The first loss is the BEST loss

If I took my losses as quickly as I did my profits, I’d be laughing all the way to the bank… Unfortunately, the psychology of fear and greed always plays a pivotal role in trading, and when you’re looking at a losing position, the fear of missing a rally or higher prices after cutting a loss is usually what keeps me in that little extra bit longer- you’ve probably been there before- ‘just wait until the 11:30am post-Europe close ramp’, ‘just wait till the 3pm ‘power hour’,’ ‘just 5 more minutes to the half hour mark in this 15 minute downtrend… and those few minutes until the next ‘checkpoint’ become an excruciating eternity as I see my position dwindle and the loss swell larger. With my Hindsight Glasses on, I can see that I should have closed my long SPY call position early yesterday on any spike opportunity that we got. Instead, I chose to wait it out, and even added a small average down on what looked like a stabilizing base and rally mid-morning. Unfortunately, as you all know, the market plummeted in the last hour, ending on new lows, making it the worst performing week of 2014 for the Dow (another minus three hundy day!) and S&P 500. And just a few days ago we were about to breach new all-time highs just shy of Dow 18,000!  My hesitation was rewarded with a LOD (low of the day) print in my position, closing it out at the last minute right before 4:15pm in after hours, when the SPY printed even lower lows and the VIX spiked higher (I was amused by an AAPL defender saying “VIX isn’t spiking, which means market sell off is aggregated to some big companies. Apple way oversold.” So 11 to 21 in a week is not spiking eh? Uh huh. Lots of levels of denial in that statement…). Fortunately I had taken gains earlier in the day on my WAG and GPRO calls, so I basically ended slightly negative to flat. I am reminded again of the very useful adage, “sell when you can, not when you have to”.  Being put to a decision during the last 5 minutes of trade when your position is at the day lows is not a feeling that I ever want to repeat having.

Once again oil collapsed, hitting fresh multi-year lows to close below $58/barrel, which is a stunning 22% nosedive from just the November 27 OPEC meeting, let alone from $100+ in the summer.

It has been a very volatile and whipsaw-y week, to say the least. I loaded up some SPY puts after seeing some bearish signals on Monday, and closed them on Tuesday for a tidy profit after the market tanked in the morning before bouncing back strongly. I attempted to keep some short exposure in the market by getting back in some December 205 puts at $1.94, having scaled out of them earlier near $3, but was stopped near the day lows as the market continued to bounce. Too bad, as these puts steadily held above $3-4 over the next few days as the market continued its decline, and closed at the week’s high of $5.75! S&P 500 futures closed below 2,000 at 1,998 so this will make for an interesting week with the FOMC meeting on Tuesday and Wednesday, with an announcement on Wednesday Dec. 17 at 2pm eastern.

So, my mantra from now on is “The first loss is the best loss. Take the first before it gets worse!!!”  Trade well, and stay disciplined my friends.

The Swiss say ‘NEIN’ to more gold in the Swiss National Bank

Gold is starting to look like Swiss cheese these days, with a lot of holes and ready to meltdown into a fondue… the shortened trading day in the US markets on Friday started off with a modest 0.7% drop in gold from $1,190 to $1,182, but it eventually cascaded into a massive 2.65% decline, ending down over $31 for the day to close at $1,165, ahead of the weekend Swiss referendum on whether the SNB should hold a minimum of 20% gold in its reserves. Today, we got the answer, and it was a resounding ‘No’ at 77% of the vote.

Someone seemed to know something during Friday’s equities session as junior miners were shellacked, with GDXJ down more than 12%, and the corresponding 3x leveraged bull (JNUG) and bear (JDST) ETFs making 35%+ moves. Interestingly there seemed to be a lot of new goldbugs and gold bulls joining StockTwits in the last couple of weeks, and their recent bravado led me to believe we were at an inflection point. Of course, the biggest news was the stunning (or maybe not so stunning, if you had been expecting OPEC to not cut their production) 10.3% plunge in oil, which roiled energy names like CVX, COP, XOM. Another double-digit winner was ERY, the 3x energy company ETF (ERX is the bull ETF with a corresponding move in the opposite direction). Even though the S&P 500 was green for most of the morning it eventually succumbed to the selloff in the energy sector, closing red for the day, having touched yet another all-time high. However, airlines were a huge beneficiary of the double whammy of lower oil prices and holiday travel, with UAL, AAL, LUV and JBLU leading the charge.

On the economic calendar this week we have China Manufacturing PMI numbers out tonight at 8pm ET as well as HSBC Manufacturing PMI at 8:45pm. Europe Manufacturing PMI is out tomorrow morning at 4am, US ISM Manufacturing follows at 10am, with Fed Chair Janet Yellen speaking on Tuesday at 8:30am, and an ECB interest rate decision and press conference on Thursday at 7:45 and 8:30am respectively. US jobless claims will be out at 8:30am that day, and all payroll numbers out on Friday at 8:30am.

Have a great week all, trade well, and stay disciplined!

Thar’s GOLD in them thar hills!

What appeared at first to be another rout in gold on Friday turned into a monster bounce rally, after prices hit a low of $1,146 before roaring all the way back up to $1,192, just shy of the psychologically important $1,200 level. This lit a fire under the still beaten-down and almost forgotten miners index, GDX, which clocked a massive +6% gain and closed above the recent $19 resistance level. The triple-leveraged NUGT ETF added 17.4% to close at $13.90. Could this be the start of a recovery after falling off the cliff last month upon the official announcement of the end of QE? The weakness in the US dollar also helped, as it took a breather after a strong rally, which also helped oil prices bounce.

This has been an impressive week for tech names, with AAPL hitting new all time highs of $114.19, just a hair’s breadth away from the pre-split $800 level. YHOO also powered to new highs, as did BABA, reaching exactly $120 before pulling back five bucks and change. Interestingly, BBRY also broke through $12 on Thursday, a level not seen since August 2013, as CEO John Chen announced new software and gave a tantalizing glimpse of his plans for potential new partnerships in China with Lenovo and Xiaomi, as well as confirming a deal with Samsung during their Investor Day event. Unfortunately any bets on a strong finish to the week proved, well, fruitless, as it gave back all of Thursday’s gains and more. Granted, the stock had already rallied the entire week so perhaps this was the pause that refreshes.

FOMC minutes are out this Wednesday at 2pm ET, as well as some jobs and housing numbers the rest of the week. Full US economic calendar can be found here.