Breaking Chart Alerts Opening Bell 11/17/2022

Breaking Chart Alerts Opening Bell 11/17/2022

Good Morning Traders 

Pre markets are down as of the start of me writing this piece today collectively over 1%.

 

Fear is coming back into the market about the US headed into the recession. This is nothing new, but obviously as we have talked about, people get overly excited and tend to jump the gun when they see the first sign of any positive sentiment.

 

Last week with the CPI numbers coming in better we saw a huge rally in equities, paired with softer than expected PPI numbers. Stocks rose.

 

As we (as intelligent traders) notice, this really changes nothing in the overall direction of the markets.

 

The Federal Reserve is nowhere close to seeing the numbers they want to get inflation back at their targeted rate of 2%. We are still at 7.7 YoY.

 

We only got ONE softer than expected reading. Exactly our point when we say to be very cautious jumping into bullish positions.

 

Multiple Fed officials, today included, have came out and said that the Fed is nowhere close to slowing hikes, and the ongoing stance at the moment stays the same. The market can price in a Fed pivot all it wants, but until we actually get officials unanimously saying they are going to pivot, we have to play the markets as such.

 

Yesterdays Retail sales numbers came in strong, fueling the fact that consumer demand is still robust and retail is “dealing” with high prices. We have no choice.

 

It takes time for Fed policy to work its way into the overall economy which is why even though we have already had aggressive rate hike after aggressive rate hike since roughly June/July, we are only now in the middle of November seeing the first signs of a slowing CPI.

 

As well, we could very easily CPI remain at the current level, or maybe even a small boost back above 8.0%. Until we get the numbers for the next few coming months, we should not be overly excited about a Fed pivot. ESPECIALLY when they themselves are saying it is not time yet!

 

But that is okay, if the markets want to overreact and jump the gun, then as smart investors we will take advantage and use our knowledge of how the markets ACTUALLY work to lock in some great trades. 

 

US Initial Jobless Claims 222K vs 225K Est.

 

US Continuing Jobless Claims 1.507M vs 1.5M Est.

 

Philadelphia Fed Manufacturing Index (Nov) -19.4 vs -6.2 Est.

 

Building Permits 1.53M vs 1.51M expected

 

Housing Starts 1.43M vs 1.41M expected So we have mixed data coming out at the 8:30am mark.

 

Housing numbers looking better but by a minimal amount, Jobless claims less than expected, Continuing claims higher slightly than expected, but the kicker.. Philly Fed Manufacturing with a big miss.

 

Markets are slightly lower again on this news. It will be interesting to see if we continue the pullback today as we have broken support that was created in the indices over the last few days.

 

We will be looking to capitalize on these movements if we get a continuation of the selloff. 

 

As always practice proper risk management and Good Luck!

 

 

 

 

 

 

Top Upgrades, Downgrades, Initiations, Pre-Market Movers, Unusual Options Activity, and Economic News

 

 

 

 

Pre-Market Movers 

 

 

 

 

 

Upgrades 

 

 

 

Downgrades

 

 

 

 

 Initiations

 

 

 

 

Unusual Options Activity

 

 

 

 

 

 

Economic news

 

 

 

 

Five Things You Need to Know to Start Your Day

 

 

1. Republican showing

 

Republicans won a narrow House majority that gives them the power to halt President Joe Biden’s agenda, yet their slim margin marked a letdown for a party that had counted on decisive election results as a springboard for the 2024 presidential race. The party finally gained the minimum 218 seats needed to control the chamber, the Associated Press reported Wednesday night. While slender, the majority hands Republicans control of committees with subpoena authority, allowing them to make good on campaign pledges to investigate Biden’s administration and family, as well as social-media companies that conservatives claim are biased against them.

2. Turmoil bets

 

Investment giants with a combined $2.3 trillion in assets are bracing for a challenging 2023 and casting their nets far and wide for opportunities. Fidelity International CEO Anne Richards said that sentiment in Asia — including China — could rebound faster than other parts of the world. Ontario Teachers Pension Plan CEO  Jo Taylor is looking to mining assets, with rare earth minerals and metals a key target.  Meanwhile, Temasek International’s Chief Investment Officer Rohit Sipahimalani said now is the time to slow investments and help companies in its portfolio survive the impending economic downturn.

3. Crypto fallout

 

After helping spark a crypto crisis, former FTX.com CEO Sam Bankman-Fried published a series of tweets that combined apologies for his failings with his perspective on what went wrong at the companies he founded and ran. “We got overconfident and careless,” he said. Meanwhile, the fallout from FTX is sideswiping the Gemini crypto exchange that’s owned by the billionaire Winklevoss twins. It halted redemptions from its Earn product, which lets investors accrue as much as 8% in interest by lending out their crypto, leaving $700 million of customer money tied up.

4. Cautious markets

 

S&P 500 futures fell 0.1% as of 5:21 a.m. in New York, while Nasdaq 100 contracts were flat. The dollar traded near session highs, weighing on most Group-of-10 currencies. Treasury yields climbed across the curve, led by 10-year rates. Oil and gold fell, while Bitcoin pared earlier declines.

5. Coming up…

 

It’s a busy day for Federal Reserve speakers, starting with St. Louis Fed President James Bullard at 8 a.m., followed by Fed Governor Michelle Bowman at 9:15 a.m and Cleveland Fed President Loretta Mester at 9:40 a.m. An hour later, we’ll hear from Fed Governor Philip Jefferson and Minneapolis Fed President Neel Kashkari. US jobless-claims data are also due, along with a sale of $15 billion of 10-year TIPS. In the UK, Chancellor Jeremy Hunt is set to deliver a fiscal statement.

What we’ve been reading

 

Here’s what caught our eye over the past 24 hours:

And finally, here’s what Joe’s interested in this morning

 

On the Odd Lots podcast today, we begin to tackle the downfall of the Sam Bankman-Fried empire.

 

Our first guest is Evgeney Gaevoy, the founder and CEO of Wintermute, the largest crypto market-making operation.

 

His firm was an active market maker on FTX, and while it got some money off the exchange before it went bust, it did ultimately take a hit.

 

FTX had a reputation for being a high-quality place to trade, in part because it allowed for easy cross-margining of assets (basically allowing a trader to use any base asset as collateral to get leverage). But one thing that Evgeney notes is that the actual throughput on the site — how much one could trade — was, in his words, “abysmal.” FTX was scaling, he said, but not by nearly the numbers it needed to be. So in his view, that cross-margining came at a computational cost that was proving difficult to improve.

 

Another thing that’s interesting is he notes that, at least as of when we recorded the interview on Monday, that Wintermute had pulled its market-making activity from some lesser “tier three” exchanges right now. Not necessarily because they think they’re going to collapse, but basically that they need to do more due diligence in order to feel comfortable trading there. Of course, the problem this week is that we’re seeing more operations seize up and freeze redemptions, which in banking can create self-fulfilling spirals.

 

We also talked about his perception of Alameda, and how it managed to (seemingly) lose so much money. One theory that’s floating out there is that it was essentially a loss leader for FTX, that rather than serving as a true market maker, its job was to take losses in order to give professional investors more gentle liquidations on the site. He’s not sure if that is in fact the case, and it remains a big mystery, but it seems plausible.

 

On this note, our second guest in the episode is James Block, who was an early FTX/Alameda whistleblower. He made the good observation that providing trading for professional institutions is not necessarily particularly profitable. Coinbase has been an example of this, where the margins on retail trading are far higher than they get from the pro offerings. As such, you can imagine how FTX, despite having built up this massive position and reputation as a top destination for professional crypto traders, may not have been the money printing behemoth that everyone assumed.

 

The whole conversation is worth listening to. Check it out on Apple or Spotify. And tomorrow we’ll be releasing the second half of our look into FTX, with a conversation with Bloomberg Opinion’s own Matt Levine.

Stocks We Are Watching

INTC Still holding above previous squeeze levels. With a negative sentiment creeping back into the market place, we could see INTC stall or drop on the back on semi conductors being overbought. We have hedged this trade with a potential nice TSM short play.

 

 

 

FDX Has pulled back to the breakout point of the ascending wedge. We would like to see it hold the 163.00 level and resume the rally after retesting this level.

 

 

 

TSM is a new position I picked up yesterday. TSM got an extremely overexaggerated move after Berkshire Hathaway announced its large position. In my opinion, I think the stock needs to reset back to normalizing levels before a continuation and I think we are positioned to take advantage of that.