The big excitement last night was another gasoline (/RB) pipeline explosion in Alabama, which sent prices flying more than 10% higher overnight and now around $1.55 from $1.41 yesterday. We shorted it this morning in our Live Member Chat Room at about $1.575 so we'll see how it goes – clearly the move is overdone but those are our favorite kind of moves to bet against!
Latecomers (in Live Member Chat we shorted much earlier for better prices) were fortunate it was a slow grind down and we bounced just under the $1.55 line until 11 and then the bottom fell out hard and fast and, by 12:15, we were below our goal of $1.475 (as our original short was $1.575 and we were hoping for a 10-cent drop) on contracts that pay $420 per penny, per contract!
Futures are a really fun way to put some of that sideline cash to work and an entertaining way to day-trade the markets while you wait for your responsible, long-term positions to mature. This morning, also in our Live Member Chat Room, we went long on Natural Gas (/NG) as it tested the $2.80 line and we'll likely initiate a long on the ETF (UNG) today during our Live Trading Webinar (1pm) – possibly the last one before the Trumpocalypse.
Speaking of market turmoil in fear of insane electoral choices being made – we added another hedge yesterday to our Short-Term Portfolio because it hasn't stress-tested well enough this week to make us comfortable against a sharp correction – which is a mounting possibility.
As you can see from Dave Fry's S&P ETF (SPY) chart, we've broken significant support as we retest the September lows. If we quickly reverse back over the line TODAY, then it will be no more significant than the mid-October panic was but, if we finish the day below the line – DOOM!!! And you need to take my DOOM!!! calls seriously – just last Tuesday, I said to our Members (at 5:30 am, in fact):
Futures off half a point and heading lower at the moment. Watching 1,200 on /TF and 18,000 on /YM – below that is DOOM!!!
Even worse, Dollar 98.485 is trying to help and it isn't.
/BZ right at the $50 line, below that is DOOM!!! /CL $49.20
We all know how that turned out for oil and the Russell Futures (/TF) just tested 1,170 while the Dow Futures (/YM) down to 17,900 so, like the S&P, failing to retake that critical line at 18,000 – TODAY – is DOOM!!! Have I mentioned how much I like CASH!!! lately? Hedges too, cash and hedges – that's my favorite play into the election.
On the S&P Futures (/ES), we're sitting right on the 2,100 line this morning and that is hyper-critical as well and we have a Fed Rate Decision at 2pm – just to keep things interesting and that will be right in the middle of our Live Trading Webinar (starts 1pm), so hopefully some good opportunities to profit from the nonsense.
Now, of course we're going to bounce off the 2,100 line – it's MAJOR support but we have a 5% Rule™ for that and it tells us that the drop from 2,150 on the S&P to 2,100 should give us a 10-point weak bounce back to 2,110 and we aren't even going to be excited until we see the 20-point strong bounce back over 2,120 holding. That's a long-term view, of course but the short-term drop from 2,130 yields 6-point bounces to 2,106 (weak) and 2,112 and, as we can see, the strong bounce already failed on yesterday's BS closing rally so it's not looking good at the moment.
But, of course, the Fed will not raise rates at 2pm and it's possible their language gives the bulls an excuse to rally us higher so we'll watch and wait and see where they can rally us to but breaks below our watch lines at 2,100 on /ES, 4,750 on /NQ, 1,170 on /TF, 17,900 on /YM and 17,000 on /NKD will give us a nice, shortable opportunity to short the lagging futures with tight stops above.
As to what's going on in the World – well, we're supposed to pretend the election isn't happening as it apparently upsets the readers. Despite editors cutting all but my first paragraph of commentary from yesterday's post over at Seeking Alpha, a reader named Robgra commented:
It's sad that SA has turned into just another political rag. This article Trumps them all. Hoping for an ignore button for Christmas.
He should become a Member at PSW – we do have ignore buttons in our comment section (and imagine if he read what I actually wrote – his head would explode)! So I will pretend that politics don't affect the markets so we don't offend anyone's delicate sensibilities because, after all, the Founding Fathers certainly wouldn't want a free and spirited debate on the issues. Of course, ignoring politics and pretending they have nothing to do with the markets is a lot like ignoring the sun and pretending it has nothing to do with life on Earth but, then again – look at the people we're protecting – they don't believe in science either!
So, other than the thing we can't talk about (do we also have to pretend the effect it has on the market isn't happening and then make fake predictions to cover up the fact that we're covering up the facts?) and other than the Fed at 2pm, we have the EIA Oil Inventories at 10:30 and, yesterday, API showed a 9Mb build and that sent oil tumbling down below $46. If the EIA confirms a huge build this morning, we could easily see $45 – probably lower but it's the NET build that matters, not just the headline build in oil.
Stocks in Europe and Asia declined and I can't tell you what the key reason was but let's pretend it was because of the unseasonably sunny weather in New York yesterday (it was lovely) and a flaw was discovered in Microsoft Windows exploited by hackers who couldn't possibly be tied to a country where hackers are tied to something else because none of that stuff happens and doesn't affect the markets (thank goodness!).
Health Care stocks (IBB) are making year lows for unspeakable reasons, maybe having something to do with the swallows leaving Capistrano early this year? I'd love to tell you how to play it but that would depend on whether or not something happens next week and, of course, what's happening next week?
Well, there's nothing I'm going to talk about! It's a shame because it's a huge opportunity – the kind that rarely comes around – I will talk about it in the Webinar – that's for Members only and our Members are carefully selected from the population and pass tests showing they have the maturity to discuss sensitive issues, thank goodness!
If you think you might be missing a piece of the big picture, imagine what happens when you are reading a newspaper or magazine that is owned by a wealthy individual that has his own political agenda. SA Editors are good people but they worry about losing readers and losing advertisers and I don't really answer to them but imagine if I depended on a place like that for my income – you wouldn't know any of this stuff and, if you believe you would be happy in your ignorance – you really are ignorant...
Everyone's opinions are shaped by what they believe in and so I'm very straight-forward about my politics so that, when I told you in our 2010 Outlook that Obamacare would be a boost for the Health Care Sector and picked a dozen stocks we liked for the long haul – you knew that was the opinion of a bleeding-heart Liberal with strong Socialist tendencies (despite being a devout Capitalist). Just 3 years later the average gains were over 70% on the stock picks alone – not including our options leverage.
I also predicted, in 2010, that our economy was bifurcating and that it would lead to civil unrest and, potentially a revolution. We may be just 6 days away from the proverbial match being struck but let's focus our discussion on Yelp's (YELP) earnings – because THAT will really make you a better-informed investor and help you navigate your portfolio through troubled times.
Good luck out there and watch those bounce lines!
Provided courtesy of Phil’s Stock World.