IIFT Daily Note with Peter Brown

Coke and Artificial Highs

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IIFT 2


Good Morning,

We had another day of mixed markets yesterday with continued slide in oil price taking a small hold on the markets for the afternoon. I was anticipating a weaker market and looking for new daily lows in the US. We did see a new low in the Dow and S&P but some good earnings for Dow Stocks has pushed it right back up.

Overnight in Asia markets have looked very happy with risk on pushing Indices higher with the Nikkei as the driver. This has in turn pushed the Dax into new daily highs and US Markets starting this morning 50pts higher. In currencies, Usd/Jpy is back up along with the Nikkei as QE injects an artificial high into the asia timezones bloodstream.

We looked at the possibility of a straddle on AUD overnight but any insomniacs looking at this at 2am would have seen too volatile a market to attempt it. These eccentic overnight moves are highly irregular as we are so used to deadcalm. For insomniacs and shift workers or anyone on holidays in the east at the moment there could be a strategy to deploy here, but for us stuck here back home it’s flat mixed markets and flat mixed weather.

Today will be tricky, there are many ways this market could go with many drivers out there trying to grab the wheel. My eye is still on Oil and it doesn’t look good. I can see it slipping further and if it does I expect markets to slide back with it, sobering up with a come down following the Asian party highs.

Remember this is not clear, as I said it is mixed at the moment and the party could go on but I expect it won’t. As it is unclear, again we trade with low risk stakes.

Expect volatility later tonight as the FOMC takes place. I do not anticipate much change but it has been known to bring volatility.


Peter’s Dax fade should be fine to start with this morning, with markets already very high I would like it to rally on the open and a sell all the way back as it will be way overpriced at that point.

Keep risk levels lower than normal for now until we have a very well defined market with a clear fundamental driver.

If any Members feel they have found a high probability trade (good chance of success) or are trying any strategies they want to share please feel free to post in the comments section below.


Earnings:

We had a boost in earnings for Apple and Caterpillar with a dip for McDonalds. This is market positive and we should see Apple back above the 100 level. It should struggle to get past the 105 level but a break above could see the end of the year long downturn in the Apple share price. We will keep an eye on this.

Pre US Market Open should see earnings from some big names like Coke Cola but the main one that will be in discussion will be the Facebook earnings after the close in the US. I would love to see this cause a dip in Facebook Share price. I am a buyer of Facebook and looking to buy again on a dip. I have added a chart below if you wanted to have a look.

Facebook


Some better than normal straddle opportunities today see calendar below….


On the calendar today:

09:30 – GBP GDP – Good Straddle Opportunity

13:30 – USD Durable Goods Orders

15:00 – USD Pending Home Sales

15:30 – Oil Inventories – Straddle but use low risk in this as it is a higer risk strategy

19:00 – USD Interest Rate Decision – worth a small straddle

Nothing major overnight

http://www.iift.ie/economic-calendar/

Anyone looking for more info:

Comments and questions to noconnor@iift.ie


Links to interesting Articles:

These articles are useful to increase market awareness but do not necessarily reflect our views. Click to view.

From Tommy:

http://www.independent.ie/business/irish/european-stock-rebound-stalls-34911784.html

http://www.irishtimes.com/business/personal-finance/stocktake-are-markets-irrationally-exuberant-1.2733759


 


 

Day trading picture 1

Apologies for the delay….

S&P (Cash/DFB)

I got my new daily low but it was not a sustained dip with some good earnings displaying a stronger economy than expected and a boost overnight in Asia. It is stalling here at this 2174 level and it’s going to need another boost to get above here. Not expecting a new all time high today so it could be a swing traders sell here and a swing traders buy down at 2160. We need a break of these levels to know our next move, it could come on the back of a further slide in Oil or a catalyst from the FOMC tonight.

Conditions: Choppy Resistance: 2,174 Support: 2,160


Wall St (DFB)

Similar to S&P but usually much higher risk/volatility at the moment with earnings season in full swing. I actually preferred the Dow moves yesterday. Also at resistance here so expect much the same as S&P from here.

Conditions: Choppy Resistance: 18,540 Support: 18,400


DAX (DFB)

Way too overbought. Not entirely sure where all this coming from. Some good news out there but US should be outperforming it in my opinion. This is an example of being out of tune with the price action. For this reason I am avoiding Dax. Fade trade is fine but this is too overbought for me and I can’t sell it until I understand what is driving it so high. Good resistance at 10,350.

Conditions: Choppy Resistance: 10,350 Support: 10,230


FTSE 100 (DFB)

Same as yesterday, an overbought market that has some weakness in it, not something I am keen to buy right now. I am not interested in this at the moment but could be a good sell over the next 2 weeks if Oil continues to slide.

Conditions: Choppy Resistance: 6,750 Support: 6,710


EUR/USD (DFB)

Stuck at 1.1000 again looking for a break below 10980. Stuck between support and resistance.

Conditions: Calm Resistance: 1.1000  Support: 1.0970


USD/JPY (DFB)

Back into bull mode and should be looking for a buy today. These levels look ok with stops below 10450. Watch out for FOMC tonight. If we have profits. Take them and set a straddle.

Conditions: Choppy Resistance: 106.50 Support: 105.00


AUD/USD (DFB)

Crazy moves overnight. Weak today. No great opportunity here really with an oversold weak market. Stuck in a range here also between the levels, watch for any break.

Conditions: Choppy Resistance: .7505 Support: .7455


GOLD (DFB)

Unbelievably flat. No clear direction here at the moment.

 Conditions: Choppy Resistance: 1322 Support: 1314


SILVER (DFB)

As above, in a tight range, waiting for a break out.

Conditions: Calm Resistance: 19.70 Support: 19.50


Strategic trades picture1

 


Equity Trades picture1

 Trade:  From David Flynn

Short AAPL @ 99.60 S/L 106.00 T/P 80.00

I think sentiment is badly offside as analysts have yet to take numbers down. I think they are going to be earning less than $8.

They recently leaked that they’re going to a three year iPhone cycle. That means iPhone 7 is likely to have little improvement from 6 and 6s. Sometime between now and October the market is going to have to adjust to that new reality.

The lower unit sales will also start to hurt as operating leverage works in reverse. New units and trips to Apple stores drive sales of related products. New iPhone users are buying the most apps early on. So these things will work in reverse as units fall, and I don’t think that’s in the numbers either.

Also short interest is very low and call open interest swamps puts. I don’t think anyone is short.  These mega caps can be good to trade because once momentum develops it is very hard to turn it.


END

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