Today will be a "big" day for markets as the Federal Reserve will announce their decision on the new target Federal Funds Rate.
Currently, markets are pricing in a roughly 80% chance of a 25bp cut and a 20% chance of a 50bp cut. This means market participants have assigned 0% odds to rates remaining where they are after today's meeting.
We've been pretty clear over the last few months about where we stand regarding the different asset classes, so there's not much left to do other than wait and see how prices settle by the end of the week.
With that said, here are a few charts we're watching through Friday's close.
Scanning through the plays that appear in the latest All Star Chart Quarterly Playbook, I see many that have pulled back into support levels and/or near levels that we previously labeled as "bullish above." This offers a clue that perhaps stocks are heading into a rest period. We've had a good run off the "Christmas Miracle" bottom and maybe here's where stocks catch their breath?
With that as a backdrop, I scanned our universe of liquid ETF names and found a candidate to put an income trade on to benefit from any sideways action we may be headed into.
Selling continues and now many broader market and sector indices are at or below support, so in this post, we'll look at some of those charts and assess the damage that's been done.
On July 23rd the NY Chapter of the CMT Association had the pleasure of hosting Tony Dwyer, Chief Market Strategist at Canaccord Genuity.
Tony provided an interesting perspective to our Technical-oriented group because while he focuses on Macroeconomic and Fundamental data in addition to Technicals, he emphasized that his approach is always data-based, not opinion-based.
He performs Technical Analysis of Fundamental data.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it's a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now.Buy,Sell, or Do Nothing?
Do you see how stocks and gold can make new highs at the same time? Who said they couldn't? Why does it have to be one or the other? The current market environment is a great reminder of this. Don't forget it.
So? Should we expect Gold and Silver to keep going?
In this Episode of Allstarcharts Weekly, Steve and I discuss the Intermarket Relationships that help identify the next direction for US Interest Rates. These assets include Regional Bank Stocks, Utilities, Real Estate Investment Trusts, Copper, Gold and TIPS among others. Which way are Rates heading next?
With earnings season in full swing, unique opportunities with options often spring up.
It's pretty common for the prices paid for options to increase leading up to earnings announcements. It's a classic example of the battle of fear and greed playing out. On one hand you've got nervous shareholders purchasing insurance to protect themselves from any serious adverse price action, bidding the prices of puts higher. On the other hand, you've got shark speculators looking to participate in a sharp reaction to make a quick buck in either direction, adding further buying pressure to both puts and calls.
The astute options participant can use this battle to leverage into his own vision of the big picture.
I don't make it my primary business to go against the trend. Sure, it can be pretty satisfying and certainly pays well to nail a turn in a major trend. But it's a tricky business that has left behind a graveyard of wannabe Heroes.
But every so often the stars align, risk is clearly defined, and supporting evidence suggests a turn may be at hand.
