Good Morning Traders
Happy Day Trade Friday! We are excited to jump on this morning and hopefully capture some volatile swings in the market.
This week has been rough with the majority of every live stream having a heavy consolidation of price action, and a lack of opportunities to capture intraday swings, making it rather challenging to lock in some serious returns.
But that is okay, we are patient and we are resilient and we believe that today will be a big opportunity to catch some intraday moves. Stocks and equities are up almost .75% collectively in the pre market trading hours after having weighed the hawkish comments of Fed speakers this week.
The general consensus seems to be that the markets are expecting the Fed to begin their dovish stance, even if their actions need to remain on the hawkish side for now. I want to emphasize that this is a perfect opportunity to notice how the markets price things in for the future and how we can potentially start to position accordingly.
We say all the time, buy the rumor sell the news. As the rumors of a dovish pivot seem far away, they are still present, meaning the market has started to act upon that early. We can start to anticipate some bullish action in the markets and when the time comes, unload some positions, so that we are not caught in extreme volatility with those positions as the Fed speaks next month.
We will watch the markets closely over the coming weeks.
After 4 days of consolidation we are hoping to see the ranges broken today and hopefully markets pick a direction. SPX is trading back up to 4000 and it will be interesting to see if we can break and close this level heading into the weekend.
A close above 4000 could mean a very bullish week after Thanksgiving if the move holds, which we are in hopes of, as the majority of our positions are to the long side.
We have a couple shorts on acting as a bit of a hedge but might look to exit out of those by the end of the day depending on how the markets reacts.
I want to reiterate again that we are not close to out of the woods yet, while positive sentiment seems to be pouring back into the markets right now, we still have quite a ways to go before price stability is back on track and we have a “normalization” of the inflation rate.
Next week we have Thanksgiving which means there will be significantly less volume for trading, so today we may see that volume spike today as investors prepare for the holiday.
As well, there are no major news event releases next week too, so if there happens to be low volume today, it may be a while before we start to see the volatility that we really hope for in a trading day.
We will be patient and we will not force anything and if there are limited opportunities today to capitalize, then so be it.
We will come back strong after the holidays ready to go. We are Live at 9:30am today! Do not miss out
As always practice proper risk management and Good Luck!
Top Upgrades, Downgrades, Initiations, Pre-Market Movers, Unusual Options Activity, and Economic News
Unusual Options Activity
Five Things You Need to Know to Start Your Day
1. Hawkish hints
St Louis Fed President James Bullard upped his view of where the Fed rate should be to between 5% and 5.25%, from 4.75% to 5% previously, stressing this is a “minimal” level. Bullard has been one of the more hawkish members of the FOMC and given the direction of policy this year has also been one of the more influential members. However, the Fed might start to face more resistance from a divided Congress, with Democrats warning about job losses, while Republicans continue to stress the importance of price stability.
2. Mortgage update
US home buyers got some rare good news yesterday as mortgage rates saw the biggest weekly decline in nearly 41 years. The drop — which saw the average rate for a 30-year fixed mortgage fall to 6.61% from 7.08% last week — reflects a change in Freddie Mac’s methodology that the company says will provide a broader, more accurate view of the mortgage market. Housing could use a boost — separate data Thursday showed new home construction continued to decline in October as builders contend with a sharp retrenchment in housing demand.
3. Twitter exodus
Elon Musk gave Twitter employees an ultimatum to either commit to the company’s new “hardcore” work environment or leave. Many more workers declined to sign on than he expected, potentially putting operations at risk, according to people familiar with the matter. So many employees decided to take severance that it created a cloud of confusion over which people should still have access to company property. Twitter closed its offices until Monday, according to a memo viewed by Bloomberg. Musk’s takeover of Twitter is still facing US government scrutiny over national-security concerns that his foreign partners may be able to access user data, people familiar with the matter said.
4. Session highs
US futures advance, with S&P 500 and Nasdaq 100 trading at session highs as of 5:45 a.m. New York time. European stocks rally as all sectors rise, led by energy, miners and financial services. The dollar is marginally lower, though still within Thursday’s range. The British pound reclaims $1.19, while the Japanese yen hovers below 140/USD. Treasury 10-year yields outperform comparable German and British bonds by about two to three basis points, to trade around 3.8%. West Texas Intermediate futures trade below $82, while gold and Bitcoin see small gains.
5. Coming up…
Existing home sales form the backbone of today’s US data, with the October number seen coming in at 4.4m, down from 4.7m before. The leading index is seen coming in at -0.4%. In Canada, the Teranet/National Bank HPI figgure is due, as well as readings on raw material prices. COP27 ends today, and earnings include Gazprom and Rosneft.
What we’ve been reading
Here’s what caught our eye over the past 24 hours.
- Meltdowns are reshaping crypto.
- JPMorgan gives new parents a break.
- Deglobalization might be good for emerging markets.
- Meta has a hole in its advertising business.
- Oil refineries find paying fines is cheaper than cleaning up.
- How not to fire people.
- The property steal of the century.
And finally, here’s what Katie’s interested in this morning
There’s a tectonic shift taking place in the investing world underneath the bond market’s tremors.
More than $446 billion has been withdrawn from US fixed-income mutual funds, a record exodus in ICI data. About $154 billion has poured into bond ETFs instead, per the ICI — even as nearly every fund posts a loss.
A lot of that comes down to nimbleness: Unlike mutual funds, which price only once per day at the market close, ETFs behave like a stock and can change hands throughout the session — an unrivaled trading advantage when Federal Reserve-induced gyrations rock global markets all day long.
“The Fed meets and tells the world at 2 p.m. what they’re going to do,” Sean Collins, chief economist at the Investment Company Institute, said in a phone interview. “With an ETF, you can respond immediately. With a mutual fund, you can respond at 4 o’clock.”
However, bond mutual funds still dwarf their exchange-traded counterparts. Even after this year’s record withdrawals, ICI data show that roughly $4.5 trillion sat in old-school bond funds through September versus $1.3 trillion in ETFs. They have a powerful incumbency advantage, too: the US retirement system and 401(k)s are largely built to integrate mutual funds.
But the direction of travel is clear. In May, BlackRock Inc. predicted that assets in global bond ETFs will reach $5 trillion by the end of the decade. That was an upgrade to their previous forecast of $2 trillion by the end of 2024 made in July 2020 — a milestone that the asset manager expects will be reached next year.
Stocks We Are Watching
INTC is playing out beautifully to the upside right now as we have held above prior resistance and reacted perfectly off the 10 day SMA. We expect to see this stock climb with the markets.
FDX Looks GREAT on a daily chart as we have broken prior resistance, turned support, and reacted perfectly off the 10 day SMA. We expect this to have a nice climb today with the markets
TSM has turned around on us, We took this trade against the overall market, it is now acting as a hedge trade if the markets decide to pullback. Contacts were very cheap and we took a small position that is now acting as a perfect hedge to our long positions.