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Technical Analysis

Technical Take: Crude Oil Eyes 2015 Peak at $62.58


Technical Take:

Crude oil (WTI) is up 1.2% today and has now rebounded a phenomenal +40% over the last five months for a YTD return of 9.4%.  For the month of November crude has gained 8% which is its third best monthly performance in 2017, behind July and September’s 9% and 9.4%. However, from a technical perspective November has been more significant.  On November 3rd WTI broke out above the $54.50 - $55.25 zone, which had been resistance for the prior 11-months beginning in December 2016.  The breakout ran to $57.92, which saw its daily RSI reach an 11-year high at 80.  In classic textbook form, WTI corrected backwards in price and retested the prior resistance zone which proved to be reliable.  Crude has now gained in four of the last five sessions with today and Wednesday making new 52-week highs.  The next resistance level begins at the psychologically important $60 level, and extends up to $62.58 which represents the 2015 annual high.  Worth noting is the energy sector ETF, ticker XLE, is down more than 13% from its 52-week high made back in December 2016.

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Stocks

Nasdaq Market Intelligence Desk - Equity Market Insight November 24, 2017


Black Friday - Stores and Markets are Open

 

As of 10:30AM EDT:

NASDAQ Composite +0.18% Dow +0.21% S&P 500 +0.19% Russell 2000 +0.12% S&P 500 Retail Index +0.65%

NASDAQ Advancers: 1150 Decliners: 969

Today’s Volume (from Wednesday) -26%

Equities are trading higher to start the morning on light volume. With the U.S equity markets set to close early today at 1pm EST, total equity volumes may be the thinnest of the year. Ten of the eleven sectors in the S&P 500 sectors are in the green this morning with Energy (+0.47%) and Materials (+0.42%) the outperformers.

  • Black Friday has grown to a bigger window over the years. Originally with early bird shopping specials on the day after Thanksgiving, to opening on Thanksgiving night, to deep discounts and highly promotional online sales over the entire weekend. Thus, Black Friday is no longer the one day, all-important indicator it used to be.  
  • The National Retail Federation (NRF) expects more than 164 million people or 69% of all Americans to shop over the long weekend. “This year, we updated our survey to more accurately capture consumer behavior throughout the entire shopping weekend — Thanksgiving Day through Cyber Monday,” NRF President and CEO Matthew Shay said. “Consumers will benefit from competitive promotions both in stores and online lasting the course of the weekend, allowing them to find the best gifts at the lowest prices.”
  • Industry analysts think that the 2017 holiday shopping season will top last year’s thanks to a strong labor market, rising home prices and a stock market trading at all-time highs.
  • Adobe Systems (NASDAQ: ADBE) expects online sales to increase by 14% to $107.4 billion for the holiday season compared to last year. Adobe stated that 46% of all traffic to retail sites is coming from smartphones. A 15% uptick from last year.

 

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Futures

Market Movers: 11/22 OPEC Meeting


 

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This video is from CME Group and is being posted with CME Group’s permission. The views expressed in this video are solely those of the author and/or CME Group and IB is not endorsing or recommending any investment or trading discussed in the video. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Options

A Bank of America Holiday Trade


Investors are starting to “bull up” in Bank of America in anticipation of a December rate hike.

 

They are buying large numbers of upside calls on Bank of America (ticker: BAC), anticipating that the Federal Reserve will announce a rate hike on Dec. 13.

The trade is animated by the basic fact that rising rates increase bank profitability. Of all the nation’s major banks, Bank of America’s earnings have long been considered the most sensitive to rising rates. Every one-percentage point shift upward in the yield curve could add about 10 cents a share in net interest income.

In recent weeks, investors bought about 150,000 Bank of America January $28 calls at prices up to 56 cents a contract when the stock traded around $26.50. The action expresses confidence the stock will soon set a new 52-week high. Over the past year, the stock has traded between $20.25 to $27.98. For the trades to break even, the stock must trade at $28.56.

While we have long liked Bank of America, recommending that investors buy the stock and upside calls since shares traded around $7 in the shadow of the financial crisis, we want to slide into a position just below the $28 strike. Since the stock is just under $27, investors can buy Bank of America’s December $27 call for 38 cents. This trade has a lower break-even price than the $28 strike. If the stock is at $28 by expiration, the call is worth $1.

The January $28 calls are now the most widely owned of all of Bank of America’s options. The second most owned contract is the January $27 call that has open interest of about 240,000 contracts.

The interest in those upside calls telegraphs that some sophisticated investors are bullish on the bank despite the flatness of the bond market’s yield curve, which is a measure of bank profitability.

Alison Edwards, a Susquehanna Financial Group strategist, advised her clients that investors are now long about 300,000 January $28 calls, which could be exercised to buy 30 million shares, a significant amount considering the stock only trades about 64 million shares each day.

To be sure, the call trades are somewhat unusual because a flat yield curve in the bond market indicates that banks will have trouble making money in a low-rate environment. But the performance of Bank of America’s stock, and the options trading activity, indicates investors are betting that the bank is more nuanced than the bond market suggests.

So far this year, Bank of America’s stock is up about 21%. If the options action is correct, the stock is headed even higher.

 

Steven M. Sears is a Senior Editor and Columnist with Barron's. He is the author of "The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails." Mr. Sears previously reported for Dow Jones Newswires and The Wall Street Journal. He has reported upon most major modern financial events, including the Asian Contagion, the bursting of the Internet Bubble, the Credit Crisis, and Europe's sovereign debt crisis. He also was part of exchange executive teams that modernized the U.S. options market, and introduced electronic trading. Interact with him on Twitter @sm_sears.

Get investing analysis that moves stocks and markets—Subscribe to Barron’s for just $1 a week.

This article is from Barron's and is being posted with Barron’s permission. The views expressed in this article are solely those of the author and/or Barron's and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Stocks

Chinese Stocks Stable After Selloff


Asia-Pacific stock markets were calm on Friday with Chinese markets steadier following Thursday's rout.

 

China's mainland stock markets steadied following yesterday's selloff, with the Shenzhen Composite flat, while the tech-heavy ChiNext was around 0.6% down. Iris Pang, greater China economist at ING told the Wall Street Journal, that the sudden stock weakness wasn't a cause for alarm and it could happen again in the short term as fund managers reposition and reallocate money between bonds and stocks. Hong Kong's benchmark Hang Seng Index closed 0.5% higher. Financial companies were among the biggest gainers with Ping An Insurance (2318.HK) jumping 2.8%, China Construction Bank (939.HK) gaining 1.5% and Bank of China (3988.HK) up 3.2%. Great Wall Motor (2333.HK) accelerated 1.6% higher after being upgraded by Jefferies, who expects the car maker to regain growth and expand margin with the new H6 and WEY brands.

Japan's benchmark Nikkei 225 recovered from a weak morning session to close 0.12% higher as Tokyo investors returned to after Thursday's public holiday. Shares in Mitsubishi Materials (5711.JP) plunged almost 9% after admitting to falsifying data on products sold to the aerospace and car manufacturing industries.  Index heavyweights Softbank (9984.JP) and Sony (6758.JP) gained 1.4% and 0.7%, respectively. The broader Topix closed 0.2% higher with Start Today (3092.JP) surging 15% to a record after announcing plans to New Zealand sensor company StretchSense a wholly-owned unit.

Australia's S&P/ASX 200 closed 0.06% lower, stubbornly below 6,000. With iron ore heading towards a bull market, resource stocks were among the best performers: Mid-cap miner Mineral Resources surged 7.8% after it surprised brokers, including Macquarie, with its bullish outlook for shipments of lithium direct shipping ore, or DSO, from its Wodgina operation in Western Australia. Mining giants Rio Tinto (RIO.AU) and BHP Billiton (BHP.AU) had moderate gains of 0.12% and 0.04%, respectively. Not for the first time this week, the gains made by energy and resource stocks was offset by the big banks - Commonwealth Bank of Australia (CBA.AU) closed down 0.4%, ANZ (ANZ.AU) fell 0.6%, National Australia Bank (NAB.AU) slipped 0.6%, while Westpac (WBC.AU) was 0.3% lower. Aconex (ACX.AU) jumped 6.4%, bringing management software company's gains for the week to almost 13% after the company's investor day presentation on Monday. Shares in billionaire James Packer's Crown Resorts (CWN.AU) dipped 0.6% after confirming it is in talks concerning the future of its 62% stake in online bookmaker CrownBet. Meanwhile the eagerly awaited launch of Amazon in Australia didn't happen, giving a little respite for beleaguered Aussie retailers.

Elsewhere, Korea's KOSPI closed 0.28% higher, while Taiwan's TAIEX ended flat.

European markets are slightly higher.

 

Get investing analysis that moves stocks and markets—Subscribe to Barron’s for just $1 a week.

This article is from Barron's and is being posted with Barron’s permission. The views expressed in this article are solely those of the author and/or Barron's and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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