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Macro

Risk On in Asia; Markets Quiet Ahead of Jackson Hole


Morning Briefing August 22nd 2017


There is a full data calendar Tuesday, with the UK public finances and German ZEW survey set to dominate the morning session.

The UK public finances will be published at 0830GMT.

Since early 2015, UK government monthly borrowing has followed a downward trend, with each month's borrowing figures coming in below its respective year-ago level. Recent data, however, seems to confirm that this trend appears to have broken down, owing to the higher inflation, slower growth environment.

July, traditionally a key a month boosted by self-assessment and corporation tax receipts, will see borrowing recede from the levels seen in the last few months but remains in line to come in worse than July 2016. Borrowing last July was stg0.4bn and the median of our analysts' forecasts places this July's borrowing figure stg0.5bn higher at stg0.9bn.

At 0900GMT, the German August ZEW survey will cross the wires.

The August CBI Industrial Trends numbers will be released at 1000GMT.

Production and manufacturing data from the Confederation of British Industry (CBI) has come in a lot stronger than both official data and market surveys in recent months, leaving analysts trying to decipher the true shape of industry.

ECB Vice-President Vitor Constancio participates in a lunch session "Inequality and the Distributional Impact of Macroeconomic Policies" of 32nd annual congress of the European Economic  Association (EEA) in Lisbon, Portugal, starting at 1100GMT.

Across the Atlantic, the US calendar gets underway at 1230GMT, with the publication of the Philadelphia Fed Nonmanufacturing Index.

At the same time, the Canadian July retail sales data will be released.

The latest US Redbook Retail Sales Index will be published at 1255GMT, followed by the FHFA Home Price Index at 1300GMT, when both monthly and quarterly data will be published.

The Richmond Fed survey will be released at 1400GMT, followed by the preliminary Treasury Allotments data at 1800GMT.

Global Economic Trading Calendar


Markets


SNAPSHOT: Below gives key levels of markets in the second half of the Asia-Pac session: - Nikkei 225 up 24.21 points at 19417.34 - ASX 200 up 21.948 points at 5747.8  Shanghai Comp. up 1.91 points at 3289.444 - JGB 10-Yr future down 3 ticks at 150.74, JGB 10-Yr yield up 0.7bp at 0.038%  Aussie 3-Yr future flat at 98.03, Aussie 3-Yr yield up 0.2bp at 1.994% - Aussie 10-Yr future flat at 97.365, Aussie 10-Yr yield up 0.1bp at 2.639% - US 10-Yr future down 3+ ticks at 126.23+, US 10-Yr yield up 1.05bp at 2.1922%

US TSY/RECAP: Treasuries ended higher Mon on light risk-off bid (N.Korea, US political jitters, weak oil, mixed US stocks). US,S.Korea began 10 days of military drills; N.Korea did saber-rattling. - Tsys improved with EGBS but range into Fri Jackson Hole's Fed's Yellen, ECB's Draghi speeches T-Notes Open Asia at 126.27+, 10-Year yield last 2.182%

US EURODLR FUTURES: Lower across the strip, under pressure since late US trade and coming off US session highs, still within ranges. Quiet Asia trade with Trump press conference on Afghanistan providing little fodder for markets.

OIL: Oil is modestly higher in Asia-Pac trade, WTI last up $0.13 at $47.50. Oil took a hit in the US afternoon on Monday with sources noting longs closing positions ahead of this week's supply data after a sharp jump at the end of last week. - OPEC compliance figures for July also engendered some negative sentiment, the latest reports are that compliance for the output cuts are at an aggregate 94% in July from 98% in July. - The decline comes as well after the Kuwait oil minister said that OPEC will discuss ending or extending the output cuts at their November meeting, leaving the future of the programme somewhat uncertain. The minister did add though that OPEC is still working to push oil stocks below their 5-Year average. - Oil bounced off lows in the US session after the news that Libya had again halted shipments from the Sharara oil field, the largest in the country, due to further tensions with local armed groups.

GOLD: Gold is lower in Asia-Pac trade, the yellow metal last down $3.66 at $1,288.22. Gold rose on Monday helped by continued US dollar weakness with DXY dropping 0.63% during the session to hit 93.00. This pushed gold to its highest level since June 6, touching $1,293.85. The move higher was supported as markets were reminded of the US/North Korea political tensions with the US and South Korea holding military drills and as US military commanders issued a warning to
North Korea in a South Korean press conference. - The decline in Asia has come amid a mild USD rebound, DXY last at 93.202 after US President Trump laid out a steady plan with regard to Afghanistan. - Markets will now look ahead to the Jackson Hole press conference with speeches from Fed's Yellen and ECB's Draghi scheduled, rumours are already swirling as to what the content of the speeches could be after a WSJ article that said Draghi could talk QE exit. – MNI technical analysis sees support at $1280.6 - Hourly support Aug 21, resistance is seen at $1293.9 - High Aug 21.

FOREX: Slightly firmer US rate yields sees the dollar recovery modestly in quiet Asia trade. Dollar-yen pushed higher from Y108.89 to Y109.34 and was last at Y109.27. Euro-dollar edged lower from $1.1824 to $1.1803 and was last at $1.1805. Aussie-dollar initially rose from $0.7932 to $0.7951 on Aussie-yen demand from Japanese investors, once that demand was absorbed the Aussie faded to $0.7935. Meanwhile, Cable trekked lower from $1.2909 to $1.2882 and was last at $1.2888.

Technical Analysis


BUND: (U17) Bulls Now Need Close Above Falling TL

*RES 4: 165.44 High June 26
*RES 3: 164.89 Falling daily TL
*RES 2: 164.79 Low June 21 now resistance
*RES 1: 164.64 High Aug 10

*PREVIOUS CLOSE: 164.52

*SUP 1: 164.32 Hourly support Aug 21
*SUP 2: 164.00 Hourly support Aug 18
*SUP 3: 163.97 Daily Bull channel base
*SUP 4: 163.69 Hourly support Aug 16    

*COMMENTARY: The 164.00 support provided the base for Monday’s rally with the close above 164.21 seeing immediate focus back to 164.64-89 where the falling daily TL is noted. Bull now look for a close above the falling daily TL to confirm focus on tests of 165.44-55 where June highs are situated. Layers of support remain with bears needing a close below 163.69 to ease immediate bullish pressure and below the 55-DMA (163.17) to target 162.50-63.
 

EUROSTOXX50: Bears Dominate While 3456.15 Caps

*RES 4: 3497.29 High Aug 16
*RES 3: 3484.66 High Aug 17
*RES 2: 3456.15 Low Aug 17 now resistance
*RES 1: 3448.39 High Aug 18

*PREVIOUS CLOSE: 3423.53

*SUP 1: 3412.65 Bollinger band base
*SUP 2: 3411.06 Low Aug 21
*SUP 3: 3395.25 200-DMA
*SUP 4: 3390.04 Low Mar 14

*COMMENTARY: Attempts to break higher last week were stifled by layers of resistance 3497.29-3539.48 where key DMAs and the bear channel top are situated. Layers of resistance are building and weighing with bulls needing a close above 3456.15 to return focus to key resistance layers. While 3456.15 caps bears focus on the 3355.40-3395.25 support region where the 200-DMA is situated. The Bollinger base remains the key concern for bears.

Eurex Futures Market Close


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MNI subscribers make critical decisions with deeper insight and greater confidence. Pinpoint information and market-moving interviews let them react instantly to market changes and more importantly, anticipate future market moves. MNI reporters are market professionals in the news business. They work like journalists but think like traders. When interviewing Fed officials, our reporters ask the same questions you would ask. They cover the angles you would cover. Write the way you read.

MNI’s news services are now available via the IB Trader platform. Please click here to view our provider page or contact MNI directly on sales@mni-news.com or +1 212 669 6400 for our Americas sales team and +44 207 862 7408 for our EMEA sales team.

This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material 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 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.


14304




Technical Analysis

Nasdaq Technical Take: Neckline of cup and handle forming?


From its 2011 highs to 2016 lows, the MSCI World Metals & Mining Index declined a dramatic 79%.  In 2016 the mining index rallied back 54% while breaking a streak of five consecutive years in the red.  This year it is seeing upside follow through with a respectable YTD gain of 13.4%, however this year’s highs were made back in early February at 244.31 and the index has since been consolidating with support down at 202.  The importance of the ~244 resistance was first established back in 2013 when it then acted as a major pivot low (support), before it then flipped to resistance on two occasions in 2015 marking that year’s high.   Three weeks ago the mining index stalled again near the 244 resistance while forming a bearish gravestone doji pattern which was followed the following week by a bearish engulfing candlestick.  The question now is whether or not the metals and mining index is ready to breakout above the 244 resistance in what could be viewed as the neckline of a cup and handle pattern carrying a measured move +17% to 278, or if the index is in the early stages of reversing 15% lower towards the 202 support.     

 

 

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.


14302




Stocks

Nasdaq Market Intelligence Desk - Equity Market Insight August 21, 2017


As of 11:45AM

  • NASDAQ Composite -0.44% Dow -0.12% S&P 500 -0.19% Russell 2000 -0.34%
  • NASDAQ Advancers: 704 Decliners: 1414
  • Today’s Volume: +13%

The past two weeks, US stocks experienced their largest swings since early November, as the markets appear to be driven by political concerns. Markets are slightly weaker this morning as investor focus now shifts towards the central banks leaders, who will be meeting in Jackson Hole this week.  After touching its November 2016 highs on Friday, the Gold trade faded throughout the session, giving up ~1.2% intraday. The price has rebounded this morning (+0.5%), helping the Bloomberg Commodity Index hang around flat territory.

  • Global currencies may see some attention this week with economic influencers set to discuss monetary tightening/easing plans while tame inflation has been hurdle for economic expansion. The Federal Reserve has been suggesting balance sheet reduction will initiate in the near-term, but has not indicated definitive timing. Thus far in 2017, the performance by the US Dollar Index has significantly underperformed as the DXY Index has dropped to a 14 month low. The Jackson Hole meeting starts on Thursday and we’re expected to hear from Janet Yellen then and the ECB’s Magio Draghi on Friday, which could spark some volatility heading into the weekend.
  • According to the Wall Street Journal, base metal prices are moving to multi year highs and may be a sign of optimism in the global economy.  Street Account says copper prices hit the highest levels in nearly three years last week, and zinc hit its highest level in a decade. Aluminum has climbed to three-year highs and iron ore has rallied nearly 35% since the end of May.  Also, the MSCI World Metals & Mining Index is up about 13% during that span.
  • This year, the Russell 2000 hasn’t been able to sustain its end of 2016 rally, which was fueled by the possibility of domestic spending under the new administration. With nine trading days left in August, the R2000 is on pace (-5.2%) for its worst month since February 2016 (-7.9%), and only posting gains 25% of the trading days. ~20% of the small-cap indices are small-cap financial companies, which appear to be less responsive to any possibility of an interest rate hike.

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.


14301




Technical Analysis

Tactical Call Remains Cautious


The market’s reaction to Bannon’s firing was equally as unpredictable as the market’s response to any other host of headlines – domestic or geopolitical – over recent months.  Trading the news is an easy way to lose money in this business and instead we do our best to focus on our knitting… prices.  Seasonality remains a headwind for stocks in the near-term, and with nearly all of our momentum indicators in no man’s land, we’ll probably need to get an oversold condition before a more actionable low can take shape.  In uptrends we cue off 20-day lows, with readings above 50% often a useful washout signal – we’re not there yet, with Friday’s reading coming in at 36%.  Put volumes haven’t spiked either, also a common occurrence in or around market lows.  The latest positioning data suggests the street is long S&P and short Russell 2000… it’s been the right trade, but now both sides are at statistical extremes.  We’d be on guard for reversion. 

While the tactical picture is mixed, it’s worth noting that credit conditions have not deteriorated to any meaningful extent (unlike August of 2015, more like August of 2013) and our longer-term trend work remains positive.  We’re also impressed with the resiliency from E.M., which closed Friday at multi-year relative highs vs. the S&P.  Brazil, in particular, continues to act well despite a frustrating Oil chart and a messy political situation.  On a similar note, iron ore is breaking out and the Baltic Dry Index has turned up… the global backdrop remains firm.     
 

Momentum Is Not Washed Out Yet

 

Russell 2000 Is Getting Closer…

 

Not Much Of A Response From Put/Calls Yet

 

Nasdaq 100 Put/Call Ratio Is Far More Extreme

Strategas Research Partners' Institutional Investor-ranked Research Team works to identify the major themes with broad implications for global financial markets. Strategas covers the broad investment landscape, with published reports discussing Investment Strategy, Economics, Washington Policy, Quantitative and Fixed Income research. The team's thematic and macro-driven approach relies on empirical data as well as fundamental and technical research to provide readers with an integrated investment strategy for a variety of time horizons.

This article is from Strategas Research Partners and is being posted with Strategas Research Partners’ permission. The views expressed in this article are solely those of the author and/or Strategas Research Partners 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.


14300




Macro

US Small Caps Give Warning Sign For The Market


The Russell 2000 briefly turned negative on the year last Friday before closing positive. It is up 0.05% year-to-date.

Make no mistake, fundamental investors are watching small caps closely.

As a reminder, they are the only liquid and somewhat correlated hedge for high yield, emerging market and private equity investors in the case of war.

The iShares Russell 2000 ETF (IWM) closed below the 200-DMAVG last week for the first time since June 2016.

The iShares Russell 2000 ETF (IWM) relative to the SPDR S&P 500 ETF Trust (IWM/SPY ratio) is close to breaking below the November 2016 level when small caps began their outperformance following the surprise election of Donald Trump.

To see the remainder of today's post, please sign up for a subscription to Sight Beyond Sight through Interactive Brokers.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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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