Dow	18303.91	+75.61	(0.41%)
Nasdaq	5310.08	+4.37	(0.08%)
SP 500	2166.65	+6.72	(0.31%)
10-yr Note	-3/32	1.569%
NYSE	Adv 2133	Dec 843	Vol 584.18 mln
Nasdaq	Adv 1670	Dec 1148	Vol 1412.91 mln

 

IN THE NEWS HIGHLIGHTS:

• European financials rebound; German regulator denies report it’s preparing contingency plans for Deutsche Bank(DB).
• OPEC agrees to limit oil production in November.
• Fed Chair Yellen struck hawkish/optimistic tone, sent dollar surging initially.

 

RECAP– Today has been a topsy turvy day in the market. At first the market rallied following the opening bell for 30 minutes heading into Fed Chair, Janet Yellen’s testimony at 10 AM EST. Her tone came off hawkish and optimistic signalling an imminent interest rate hike as “not wanting to allow the economy to overheat and causing a rapid succession of hikes later on.” This send the dollar surging while the market sold off. This later reversed as news came out that OPEC will be introducing the first cut in oil output since 2008.

In-depth look of daily news at Briefing.com (CLICK HERE)

In-depth look at after hours movers (CLICK HERE)

---

Economic Calendar

Today

• September 28: Core Durable Goods Orders m/m – Actual: -0.4%  Forecast: -0.5%  Previous: 1.3%
  • Goods orders placed by manufacturers decreasing is a negative sign as far as manufacturing growth. This comes after last month’s figure was revised down from 1.5%.
• September 28: Fed Chair Yellen Testifies 
  • Chair Yellen struck a hawkish tone in regards to an imminent interest rate rise which sent the US Dollar surging and sparked a brief selloff in the market. She went as far as tipping the market off that most FOMC members currently believe that an interest rate hike later in the year is imminent.
• September 28: Crude Oil Inventories – Actual: -1.9M  Forecast: 2.4M  Previous: -6.2M

 

Upcoming Reports

• September 29: Final GDP q/q
• September 29: Unemployment Claims
• September 29: Fed Chair Yellen Speaks

 

FedWatch November 2 Rate Hike Probability for September 28: 10.3% (View the probability chart here)

---

A Look At The S&P 500 Chart – KEY Levels

• RSI is below 50.
• On Balance Volume is below its moving average.
• Market noticeably rallied following the opening bell until it sold off after Yellen’s remarks.
• The market rallying from the rest of the day and closing at a high is indication again for another bullish open tomorrow as the market carried plenty of bullish momentum into the close. (A contrary bearish indicator is the TRIN closing at 0.71 today, but not below 0.50 which is usually what we look for in a bearish open). Look for a volatile open tomorrow.

 

---

A Look Into the Heat Map

A massive showing by Basic Materials which gained the most on OPEC’s announcement carried the market followed by Financials which gained from Janet Yellen’s remarks.

MARKETS

(click on symbol for chart)
SPX –  Neutral
DOW– Neutral
Nasdaq– Neutral
Russell – Neutral

VIX – 12.47

 COMMODITIES

Oil (USO) –  Bullish  – Today we received incredible fundamental news that will send crude oil on a new trend. OPEC has introduced a cut in oil production for the first time since 2008 which should send oil prices sky rocketing. For more information on this story, click here.
Ag (DBA) – Bear
GLD –  Bullish – Gold sold of slightly despite dollar losing momentum. This is likely due to interest rates being expected to rise which fundamentally affects gold since it is used as an alternative reserve currency to fiat money.
SLV –  Bullish – Since silver doesn’t have the same relationship to fiat money that gold does, it gained in value against the dollar. 

THE DOLLAR

UUP – USD weighted ETF – Neutral – As mentioned earlier, the US Dollar rallied on Janet Yellen’s comments earlier in the day but sold off following the cutback in oil production, closing the day at the slightest of losses. This is because of the infamous Petro-dollar agreement. As oil becomes more expensive, countries become less likely to trade it, which decreases demand in the dollar which all countries have to use in order to buy oil. We’ve often seen the price of the dollar affect oil, this is an instance when the fundamental price of oil is affecting the dollar.

 

---

SOLON’S TRADING THOUGHTS

We are seeing significantly more volatility now than we had last month. This is a great time to trade a little more directionally and pivot away from neutral trades. While volatility has picked up, it is still not considered significantly high. This makes long options still relatively cheap and debit spreads a good option. We’re going to be entering a good season for directional traders as the summer malaise is over and the news will impact the market as the US Presidential election heats up as well as other developments. I also would pay very close attention to the issue that Deutsche Bank is currently having. Large European banks have been known for the past year to have liquidity issues. While Greek banks already had their crisis last year and are working to get unwind capital controls by December, larger banks in Germany, Italy, and France will begin to require help to stay solvent. Deutsche Bank needing state aid from Germany is the first and biggest domino to tip. A banking crisis in Europe will be catastrophic for global markets.

One observation that I made on the day is that the interest rate hike hasn’t been priced in as aggressively today when looking at the CME’s Fedwatch tool. This is likely due to Yellen’s testimony being overshadowed by the OPEC meeting. Look for possibilities in oil, oil companies, and ETF’s that track energy and major energy producing nations. One ETF that I have in mind specifically is ERUS which tracks the Russian stock market. Russia was in a long depression following sanctions and oil prices collapsing nearly 2 years ago sent them in a tailspin. Valuations became absurdly low making them one a great value pick in the beginning of the year. Since then ERUS has risen nearly 50% and should continue to climb as oil increases in value. Other nations that will similarly benefit from oil are Venezuela, Nigeria, and nations in the Middle East. Also, if oil rises, expect airline stocks to be negatively affected. Just a tip when looking for things to trade with today’s important news.

---

You can follow daily trade adjustments and updates on Twitter, Facebook, or text “follow @tackletrading” to 40404 to get text alerts!

 If you are not a Pro Member and following the Stock & Option Picks, then check it out! There is a Promo code for Free 15 day trial:  THETA

---

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis.  This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise.  Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products.  By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials.  In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

 

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.