More of the same, oil soared to highs above 2008 levels and energy stocks soared the major US indices ended lower with the NASDAQ leading the way. As oil prices soared. Another Bear Market whacking or something more after initially soaring on BTFD. We look at the indices, $AAPL, $AMZN, Gold, Copper, BTC, ETH, Natural gas and oil in the podcast. We also went through the Short Dribblers & Banks $FAZ with an added bonus of small energy floaters today.
- Part A Energy #oil #natgas $ES_F #Gold $AA $OXY $XOM $APA $INDO $FCX $PTEN $BTU
- Part B Dribbler Shorts $DKNG $JMIA $OPEN $RISE $PLTR $FUBU $PATH $TASK
As always we look at the indices, Oil, Gold, Copper, Wheat, BTC, ETH, Natgas in the podcast. We talk through to today’s action and where to now … This is a high-risk trading season. …
Enjoy live commentary from Our Trading Room at YouTube as the day wraps up – feel free to like and share
In today’s post market wrap live from the trading room traders discuss the patterns through the options and futures markets that have played out perfectly from last week to today. We discuss trading psychology, risk management and trader development in today’s markets. Listen to our technical and market psychology read on the day. Join the Traders Community Podcast crew @traderscom @knovawave @Mahdavi4 @MetaJohnny1 & @velocityradar plot out 2022.
Around the table today was packed with the Fed, geopolitics, domestic political influence and distortions, reading sentiment, patterns and order flow. After hours earnings and chart pattern review. This is a high-risk earnings season. We got the Bear Market rally resolution which has angered the BTFD quotient.
We look at the indices, Gold, Copper, BTC, ETH, Natgas, and oil in the podcast. De-risking may threaten progress that has been achieved on since the COVID bailout. It also has the potential to reverse some of the progress made in protecting downside risk if banks close or restrict access to money.
- April WTI crude oil (CLJ22) futures settled higher by $4.00 (+3.5%) to $119.27/bbl. That’s the highest close since September 2008.
- Last week, the price is up over 25%.
- The high price today was the highest level since 2008. By Friday since a swing low on December 6 at $62.46, the price had risen over 92% to the high price of $116.57. Sunday night it traded over $126. The swing low from the May 2, 2011, high at $114.79 was broken. The highest level since the week of September 8, 2008. The highest in 2008 was $147.27.
- April RBOB gasoline (RBJ22) closed up +2.81 (+0.79%).
- April Nymex natural gas (NGJ22) settled at $4.833/MMBtu, down 18.3 cents day/day. May shed 17.8 cents to $4.858. The prompt month had gained 12% last week.
- Bespoke Weather Services said Monday that the forecast trended warmer over the weekend, with milder adjustments for next week offsetting colder changes to the outlook for the current week.
- The 15-day forecast remained colder-than-normal overall in terms of gas-weighted degree days, though conditions “skew a little warmer than normal beyond the middle of the month,” Bespoke said.
- Bespoke also cautioned that forecasts and underlying fundamentals for natural gas have taken on a diminished role given how events in Ukraine have permeated energy markets.
- “We can write about the changes in weather, and the fundamentals data, which we will, but it will not serve much purpose in terms of assessing near-term price action in the natural gas market,” Bespoke said. “…Until there is some resolution in the Ukraine conflict, we seem likely to remain tied to directional moves in energy in general, be it European prices, oil, etc.
- “The energy market fallout from Russia’s egregious invasion in Ukraine continues,” said EBW Analytics Group’s Eli Rubin, senior analyst. Traders “are pulling back from Russian supplies, with estimates of 2-3 million b/d of oil and product supply unable to find buyers as traders fear official new sanctions, desire to avoid being seen financing Russia, and freight and insurance costs spike.”
- BNEF data showed gas flows to U.S. export terminals Monday rose +4.7% w/w to 12.9 bcf. On Feb 18, gas flows to U.S. export terminals rose to a record 13.482 bcf.
Commodities and FX
- The dollar index (DXY00) +0.4% to $99.06.
- Gold futures settled $29.30 higher (+1.5%) to $1,995.90/oz, their highest settle in more than a year and a half, as the ongoing conflict in Ukraine pushes investors increasingly toward haven assets. Friday it closed $30.70 higher (+1.6%) to $1,966.60/oz as investors flocked to haven assets following Russia’s seizure of Europe’s largest nuclear power plant in Ukraine.
- On Friday Russia reportedly recommended that fertilizer producers halt their exports. Elsewhere, Hungary will reportedly ban all grain exports to ensure a sufficient domestic supply. The ongoing uncertainty drove corn futures to a record high while wheat and soybean futures are not far from reaching new records themselves.
For The Day
- Dow 32817.38-797.42(-2.37%)
- Nasdaq 12830.96-482.48(-3.62%)
- SP 500 4201.09-127.78(-2.95%)
- 10-yr Note -25/321.771
- NYSE Adv 658 Dec 2554 Vol 1.4 bln
- Nasdaq Adv 1208 Dec 2759 Vol 6.1 bln
S&P 500 sector watch:
- 9 of the 11 S&P 500 sectors closed lower
- S&P 500 consumer discretionary sector, fell 4.8%, corroborated the consumer slowdown narrative. U.S. Global Jets ETF (JETS 16.91, -2.12, -11.1%) fell 11%, and Uber (UBER 28.57, -1.26, -4.2%) fell 4% despite raising its Q1 Adjusted EBITDA guidance range.
- On the upside, the energy (+1.6%) and utilities (+1.3%) sectors each rose more than 1.0%.
Key Earnings Reviews
Oasis and Whiting agree to merger of equals
In the energy space, Oasis (OAS 154.05, +9.29, +6.4%) and Whiting (WLL 88.64, +5.21, +6.2%) agreed to a $6.0 billion merger of equals while famed investor Carl Icahn reportedly divested his stake in Occidental (OXY 55.67, -0.48, -0.9%). OXY lost its two board members assigned by Mr. Icahn.
Separately, House Speaker Pelosi has officially proposed a ban on Russian oil imports and additional support for Ukraine.
Bed Bath & Beyond finds a familiar retail ally
The speculative pop in Bed Bath & Beyond (BBBY 22.98, +6.76, +41.8%) has been reduced to a 42% gain from an 86% gain. The Wall Street Journal reported that Ryan Cohen, the Chewy co-founder who took an activist role in GameStop shortly before the mania, has taken a 9.8% stake in BBBY through his RC Ventures company.
Bed Bath & Beyond said, “we will carefully review their letter and hope to engage constructively around the ideas they have put forth.”
US Markets YTD
- Dow Jones Industrial Average -9.7% YTD
- S&P 500 -11.9% YTD
- Russell 2000 -13.1% YTD
- Nasdaq Composite -18.0% YTD
Cboe Daily Market Ratios:
- STOXX Europe 600: -3.0% (-6.5% week-to-date)
- Germany’s DAX: -2.4% (-9.1% week-to-date)
- U.K.’s FTSE 100: -3.2% (-6.4% week-to-date)
- France’s CAC 40: -3.7% (-9.1% week-to-date)
- Italy’s FTSE MIB: -5.0% (-11.7% week-to-date)
- Spain’s IBEX 35: -2.9% (-8.3% week-to-date)
- Japan’s Nikkei: -2.2% (-1.9% for the week)
- Hong Kong’s Hang Seng: -2.5% (-3.8% for the week)
- China’s Shanghai Composite: -1.0% (-0.1% for the week)
- India’s Sensex: -1.4% (-2.7% for the week)
- South Korea’s Kospi: -1.2% (+1.4% for the week)
- Australia’s ASX All Ordinaries: -0.7% (+1.7% for the week)
Recall Last Month: JP Morgan quant maestro Marko Kolanovic was out with a comment near lows that didn’t go unnoticed.
“Near term we recommend buying the dip on US indices given oversold conditions… though medium term we favor EM/China/Europe on a regional basis on improving activity and easing headwinds, and the UK on valuation.”Marko Kolanovic Jan 10 2022
- We stay positive on equities and expect omicron will ultimately prove a positive for risk assets, as this milder but more transmissible variant speeds the transition from pandemic to endemic with a lower human toll,
- As this wave fades, it will likely mark the end of the pandemic
- omicron’s lower severity and high transmissibility crowds out more severe variants and leads to broad natural immunity
- signs of supply constraints potentially passing their worst point
Recall back in October he said to buy the dip because fears of higher yields were overdone adding the market could absorb higher yields. “We don’t expect a broad market selloff unless yields were to rise above 250-300 bps (US 10y), which we don’t foresee in the near term,” From there the S&P 500 rose 11.5%.
Perhaps this time it’s’ different but nevertheless the algorithms liked it that day but from then ……… not so much
U.S. Treasuries shorter tenors underperformed throughout the day, ending just above their worst levels while equities spent the session in a steady retreat.
- 2-yr: +5 bps to 1.54%
- 3-yr: +7 bps to 1.67%
- 5-yr: +6 bps to 1.69%
- 10-yr: +3 bps to 1.75%
- 30-yr: UNCH at 2.15%
- The fed funds futures market March FOMC meeting implied likelihood of a 50-bps hike fell to 6.6% from 24.0% on Friday and 65.7% two weeks ago.
The probability for a half-point hike in March decreased to 50.2% from 93.8% yesterday, according to the CME FedWatch Tool.
Most of us are familiar with QE but what is QT? When the Fed reduces its balance sheet it is known as quantitative tightening, the flipside of quantitative easing. The US Federal Reserve at its December FOMC put the world on notice that tighter financial conditions are ahead. What does it mean? The possible Bifurcations would make Mandelbrot wince.
Where did it all start?
The Federal Reserve System Chairman Jerome Powell took a decidedly hawkish tone today at last month’s FOMC and the release of Minutes which sent US stock markets sharply lower. That day in the Treasury market the 2-yr yield, which tracks expectations for the fed funds rate, rose seven basis points to 0.83%. The 10-yr yield settled the session four basis points higher at 1.71%, with growing expectations for a run-up to 2.00%.
February nonfarm payrolls increased by 678,000 (consensus 400,000). The 3-month average for total nonfarm payrolls rose to 582,000 from 572,000. January nonfarm payrolls revised to 481,000 from 467,000. December nonfarm payrolls revised to 588,000 from 510,000.
- Eurozone’s January Retail Sales 0.2% m/m (expected 1.5%; last -2.7%); 7.8% yr/yr (expected 9.5%; last 2.1%)
- Germany’s February IHS Markit Construction PMI 54.9 (last 54.4). January trade surplus EUR9.40 bln (expected surplus of EUR7.10 bln; last surplus of EUR8.1 bln). January Imports -4.2% m/m (last 4.0%) and Exports -2.8% m/m (last 1.2%)
- U.K.’s February Construction PMI 59.1 (expected 54.3; last 56.3)
- France’s January Industrial Production 1.6% m/m (expected 0.5%; last -0.1%)
- Italy’s Q4 GDP 0.6% qtr/qtr, as expected (last 2.6%); 6.2% yr/yr (expected 6.4%; last 3.9%)
- Japan’s January Unemployment Rate 2.8% (expected 2.7%; last 2.7%)
- South Korea’s February CPI 0.6% m/m (expected 0.4%; last 0.6%); 3.7% yr/yr (expected 3.5%; last 3.6%)
- India’s February Nikkei Services PMI 51.8 (expected 53.0; last 51.5)
- Australia’s January Retail Sales 1.8% m/m, as expected (last -4.4%)
- Singapore’s January Retail Sales -2.5% m/m (last 1.3%); 11.8% yr/yr (last 6.7%)
- Hong Kong’s January Retail Sales 4.1% yr/yr (last 6.2%)
- Monday: January Consumer Credit (prior $18.9 bln) at 15:00 ET
- Tuesday: January Trade Balance (prior -$80.70 bln) and January Wholesale Inventories at 8:30 ET; and $48 bln 3-yr Treasury note auction results at 13:00 ET
- Wednesday: Weekly MBA Mortgage Index (prior -0.7%) at 7:00 ET; weekly crude oil inventories (prior -2.597 mln) at 10:30 ET; and $34 bln 10-yr Treasury note reopening results at 13:00 ET
- Thursday: Weekly Initial Claims (prior 215,000), Continuing Claims (prior 1.476 mln), February CPI (prior 0.6%), and February Core CPI (prior 0.6%) at 8:30 ET; weekly natural gas inventories (prior -139 bcf) at 10:30 ET; $20 bln 30-yr Treasury bond reopening results at 13:00 ET; and February Treasury Budget (prior $118.70 bln) at 14:00 ET
- Friday: Preliminary University of Michigan Consumer Sentiment survey (prior 62.8) at 10:00 ET
Trust you all had a great day, sleep well and get your trading plan sorted.
Any questions please feel free to ask them below. Trade Smart!