Each day I scan and synthesize market-moving news. I look at macro themes, currency moves and global economic indicators that support or challenge my thinking on the Big Picture and help me take the mood of the market. I like to assemble these data points so I can turn them into operational trade ideas for my clients in my Live Trading Room. Some may even make it into my Brokerage-Triggered, Trade Alerts!

You are getting this Free Bait (Daily Market Thoughts) as part of LaDucTrading’s Free Fishing Lessons! Take the next step: Come Fish With Me.


Market Thoughts

In a prepared statement, Fed Chair Jerome Powell signaled a rate cut citing “crosscurrents” that are weighing on the economy. Initially, dollar dumped and acted as a catalyst for S&P futures to shoot up. The bullish statement is the salve markets wanted to go higher as earnings are decelerating, global trade deteriorates and business investment weakens. Traders are now placing the odds for a July cut of 25 basis point at 80% (with only a 20% chance of a 50 basis point cut).  Expect more dovish policy going forward and lower interest rates. .

Lower rates gave a boost to gold and other commodities. A strong crude oil market is making energy the day’s strongest sector, up more than 4% today to the highest level since May, and back above its 200-day moving average. My first sector call out this morning was Crude and related plays. The falling dollar not help industrials like CAT and DE which were suggested shorts from over a week ago and both are still working. The falling dollar did also not help China and Emerging markets, which is likely a tell for more weakness, especially leading into their GDP print Monday.

Image

And with that, the 10-year yields spiked. It was the biggest steepening since June’s FOMC The runner-up? Election day! H/T @iv_technicals

Next Big Macro events:

  • 1) Fed communications–Powell will testify 7/10-11 while minutes from the last FOMC meeting will hit 7/10.
  • 2) China’s Q2 GDP and June data(IP, retail sales, and FAI) will hit Mon morning 7/15
  • 3) earnings season kicks off w/the banks on Mon 7/15 and will continue until early Aug;
  • 4) Mueller testifies before the House on 7/17
  • 5) flash PMIs for Jul hit on Wed 7/24 (this will be the first major eco data point for July)
  • 6) ECB decisionThurs 7/25 –investors will be listening closely for any further clarity out of Draghi about next policy steps
  • 7) US Q2 GDPwill hit on Fri 7/26
  • 8) the next FOMC meetingdecision occurs on Wed 7/31 (this will be right in the thick of the CQ2 earnings season
  • 9) US jobs report for Jul–Fri Aug 2

 

Macro Matters

Fed’s Powell says trade worries restraining the economy, hints at interest-rate cuts soon

Federal Reserve Chairman Jerome Powell said the U.S. is suffering from a bout of uncertainty caused by trade tensions and weak global growth, but he pledged to do whatever it takes to shore up the economy in what Wall Street took as a sign the central bank will cut interest rates soon.

In testimony before Congress, Powell said ongoing trade fights with China and other countries have contributed to slower growth at home and abroad and pose more risk to the U.S. economy.

The Fed, for its part, is prepared to “act as appropriate to sustain the expansion,” Powell reiterated, using a phrase that economists say points strongly to a rate cut at the bank’s next meeting at the end of July.

U.S. oil companies slash Gulf of Mexico production as storm bears down

U.S. oil producers on Wednesday cut nearly a third of Gulf of Mexico crude output as what could be one of the first major storms of the Atlantic hurricane season threatened offshore oil production and began soaking Louisiana with heavy rains.Fifteen production platforms and four rigs were evacuated in the north central Gulf of Mexico, according to a U.S. regulator as oil firms moved workers to safety ahead of a storm expected to become a hurricane by Friday.

The US government could face a potential default in September, according to a Washington think tank.The report from Bipartisan Policy Center says lower than expected tax revenues now mean there is a “significant risk” that the federal government will run out of borrowing authority in the early part of September.

 

Trade Wars and More

Trump threatens to ‘substantially’ increase sanctions on Iran

President Donald Trump warned on Wednesday that U.S. sanctions on Iran would be increased “substantially” soon, as the U.N. nuclear watchdog held an emergency meeting at Washington’s request to weigh Tehran’s breach of a nuclear deal. Trump also accused Iran of secretly enriching uranium for a long time but offered no evidence, and Iran said after the 35-nation meeting in Vienna that it had “nothing to hide”. U.N. inspectors have uncovered no covert enrichment by Iran since long before its 2015 nuclear agreement deal with world powers.

Bank of Canada Maps Out Potential Impact of Global Trade Wars

The Bank of Canada has begun to count the potential costs of escalating trade wars on the nation’s economy in a series of analyses released Wednesday as part of a rate decision in which tensions featured prominently.

No Exit in Sight From Worst Japan-South Korea Dispute in Decades

Japan and South Korea say they’re willing to meet over Tokyo’s move to restrict vital exports to its neighbor, but neither has much political incentive to climb down from their worst dispute in decades.

Decades of mistrust make it difficult for Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in to retreat from their budding trade feud. A series of looming deadlines, including a Japanese upper house election on July 21, are only raising the political pressure on both men, who can’t afford to look weak dealing with disagreements rooted in Japan’s 1910-45 occupation of the Korean Peninsula.

Stocks of Interest in the News

Snap Inc $SNAP PT Raised to $18 at Credit Suisse on Ad Load Increases

Still really like OSTK:

 

Samantha Says

Market Commentary from Samantha’s Live Trading Room and StockTwits Premium Chat Room

Jul. 9th, 9:44 pm $SPOT is a Trend Play long from mid-May ($44 PT) That looks ready to launch up toward $170 this yr. Speaking of launching… Spotify lite…”a smaller version of the streaming platform for users with slower connection or those with less storage. They hope that this will help grow the platform overseas.”
Jul. 10th, 9:31 am $BA a chase trade (long) at 355.
Jul. 10th, 9:52 am SPX over 3K. Looks like a gap and go this morning. SPX 3032 is 1.618 retracement
Jul. 10th, 10:25 am NYSE internals have been cut in half since the open
Jul. 10th, 10:35 am Crude continues to pop after inventories reported. (Long)
Jul. 10th, 10:38 am Volatility still popping. Did not take out the lows and still looks good for higher in to next week.
Jul. 10th, 10:46 am Hurricane season and I have a list of stocks that are affected positively or negatively as a result. Things like building materials, industrials, autos, and crude tend to move higher while insurers, local banks, and other sectors where revenues can be hit, tend to move lower.
Jul. 10th, 10:50 am Natural gas above 10WK. that’s encouraging.
Jul. 10th, 10:53 am WDC; Really extended on weekly – been parabolic for 4 weeks. August 22nd 50 Puts coming in.
Jul. 10th, 10:54 am OSTK: Overstock is still trading three times the expected flow. July 19 $20 calls are the largest open interest with the 18.50 calls the most active.
Jul. 10th, 11:00 am BABA; Very bearish move after gap up in to 21 WK and then gap down and breaking below 10 and 21 Week.
Jul. 10th, 11:01 am  IWM; someone y-day purchased a bull call spread expiring this week for $200K. Must close above 158.50 (tough as of now) and will make $2M.
Jul. 10th, 11:20 am STZ; Been consolidating after earnings pop higher – bouncing off TL. If it can hold above 200.50 looks good for a long to 208 (78.6 fib).
Jul. 10th, 11:45 am VLO; could be a good arbitrage play crude / brent with hurricane season. A hold above 81 a move to 88 looks good. Options market not great but stock buy with a 2% stop looks good.
Jul. 10th, 11:57 am Given Barry: long Oil and entering long VLO stock at 82.60, stop of 80.50, profit 86.50 w options: Jul 81C for 2.10 for potential chase…
Jul. 10th, 12:00 pm  BABA; Very bearish move after gap up in to 21 WK and then gap down and breaking below 10 and 21 Week.
Jul. 10th, 12:27 am SPOT has a fair amount of options coming in for July 19 and July 26 155 calls but earnings aren’t until 7/31…
Jul. 10th, 12:28 am $60 is resistance for oil but once above it can fly. As rates pop so will commodities. As oil pops so will oil and gas companies… but $60 is very strong resistance so it needs to be a strong pop.

Wall Street Jane’s Journal

Jane is not only Samantha’s Live Trading Room moderator, she facilitates client engagement and relays Samantha’s trade ideas into the LaDucTrading StockTwits Premium Room. A former banking VP during the GFC, she now trades full-time and actively shares her trading ideas, plan and process.

Sometimes you feel like a nut, sometimes you don’t. What if sometime’s you’re just nutty? I am!

Anyone who, once they understand the technical aspects of trading, says psychology isn’t a big part of your trading success is nuts!

Taking my trading today as an example; I started out the day on a high ( I call BS if you say you’re totally immune to this feeling – esp. if trading options) given the nice gap up at the open. I placed some trailing stops, but was feeling real good. We start to get some fade off the open as one would expect, but then it starts to accelerate and even though I put on my stops and knew I would be locking at at least some profits, I just started feeling pissed off that I didn’t take profits at the open. So my stops hit, I know I’m green for the week, and yet I continue to feel annoyed.

So what am I going to do about it? Revenge trade? Throw something? Nah. That’s not my style. I’m more about the talk out loud to yourself style of coping. Jane, what the f^%& is your problem? You followed your plan, protected gains and cut losers, so why the irritation? I don’t have an answer other than to say that it’s about money. That’s the straight up truth. Money and how much you have of it will always be a touchy and personal matter, and most won’t talk about it at all. The fact is this is now my livelihood and the pressures are real to perform to a level where I can maintain my fairly simple lifestyle. I love trading. I love the challenge of making well thought out analysis work for me and, frankly, my pocketbook. 100% if you make good decisions the profits will come, but it doesn’t mean I won’t be irritated when I feel like I left money on the table.

Here’s the good news: I have adopted a one-word mantra for days such as this…..NEXT!!!!!!

 

Great Reads

Fingers Crossed more people can benefit:  H.I.V. Is Reported Cured in a Second Patient, a Milestone in the Global AIDS Epidemic

⁩ Without Yield Curve Inversion, Investors Face Tricky 2019 Correction Roadmap – See It Market

“the credit bull market that began in January of 2009 will continue until the 2-10 yield curve inverts” ⁦ @FZucchi