12 Minute Read

Market Recap April 20, 2016

April 20, 2016

By | 11 Comments

MARKET SNAPSHOT

Dow18096.27+42.67(0.24%)
Nasdaq4948.13+7.80(0.16%)
SP 5002102.40+1.60(0.08%)
10-yr Note-17/321.846
NYSEAdv 1704Dec 1289Vol 961.5 mln
NasdaqAdv 1558Dec 1259Vol 1.622 bln

 

IN THE NEWS HIGHLIGHTS:

  • Oil gains after EIA report
  • Continued momentum
  • Focus remains on Q1 earnings results
  • Heavily-weighted Technology, Financials, and Health Care outperform


RECAP- Market gave up its gains during the closing hour. The market sold off through much of the night and trended sideways (with slight bearishness) after the opening bell. It wasn’t until the Crude Oil inventory supplies were released in the EIA report at 10:30 AM that oil rallied despite a 2.1M barrel increase in supply. The sharp spike in oil prices fueled gains in the market which caused the /ES futures to temporarily break resistance at 2100 before giving up virtually all of its gains in the last hour of trading. In short, a critical resistance was tested and the market failed to break through. 

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

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


 

Economic Calendar

Today

  • Existing Home Sales: Actual – 5.33M   Forecast – 5.29M   Previous – 5.07M
    Existing Home Sales came in stronger than expected after a surprise decline last month. Average home prices are up 5.7% and marks the 49th consecutive month of year-over-year gains.
  • EIA Petroleum Status Report (Crude Oil Inventories): Actual – 2.1M   Forecast – 2.2M   Previous – 6.6M 
    Oil inventories increased for a second consecutive week. Despite increased supply, the market initially bought on the release of the news and continued to buy throughout the day.


Upcoming Reports

  • April 21: Philly Fed Manufacturing Index
  • April 21: Unemployment Claims

FedWatch Rate Hike on Probability for April 20: 2.3% (View the probability chart here)


Notice S&P 500 below pic
  • Support above 20 day EMA & 2040

  • Resistance at current levels up to 2105

  • RSI-  Above 50. Close to overbought levels at 68.2.

  • OBV-  Above Moving Avg. 

  • Note that with today’s action, the market has run up over 300 points since its February 11 low without crossing under the 20 day EMA. Possibly over extended.

  • VIX was briefly below 13 today.

(Right click to enlarge pic in new tab)

 


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MARKETS

(click on symbol for chart)
SPX –  Bull
DOW– Bull
Nasd – Bull
Russell – Bull

VIX – 13.28 – Bear

—————

SECTORS – Trend on daily chart (click symbol for chart)

Materials (XLB) – Bull
Energy (XLE) –   Bull
Financials (XLF) –  Bull
Industrials (XLI) – Bull
Technology (XLK) – Bull 
Staples (XLP) –  Bull, but pulling back to neutral looking for support
Utilities (XLU)Neutral 
Healthcare (XLV) Bull
Discretionary (XLY) –  Bull
Mining (XME) –    Bull 
Real Estate (IYR) –  
Bull
Retail (RTH) –   Bull (but notice weak OBV)
Transports (IYT) – Bull
Pharmaceuticals (PPH) – Bull

——————–

Oil (USO) Bull
Ag (DBA) – Bear, possible sell off trigger if down friday
GLD   Bear
SLV –  Bull

———-

WORLD WATCH
VEU –   Bull 
EEM –  Bull

THE DOLLAR
UUP – USD weighted ETF – Bear 

—————–

SOLON’S TRADING THOUGHTS

I’ve said since the second week of the year that the market is heavily correlated to oil (nearly tick by tick). This is another day that proves the strength of the correlation.  Make sure to switch your charts to an intraday time frame (either 5 or 15 minutes) so you can see it as well. As oil goes, so does this market. 

CL

Looking at a chart of the /CL futures, you could identify that oil has put a bottoming (W) pattern earlier in the year. It then ran up for into resistance at $42.5, retraced into a new support (higher low) at $35, and came back to the previous resistance. Today’s report was all it needed to break resistance and run. Expect the first level of new resistance to hold at $44/45 and the next level at $50. We are also coming into a time of year where oil is seasonally strong and supply begins to drop. At this point, there is no reason for oil not to continue to run.

In the mean time, I am very skeptical with the S&P. At first glance, it looks to be over extended. Since its low on February 11, the market has rallied over 300 points without much of a retracement. The RSI is closing into an over bought area while the chart is violating the Bollinger Band on a daily chart. Not to mention that we have come into a critical resistance level at 2100. With the VIX being so low (and briefly under 13 today), today was a great day to buy puts to protect your portfolio as it doesn’t get much cheaper than this.

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

VIX much lower  shows complacency and bullishness in the markets.  Therefore credit spreads have been hard to find.  But consider calendars for positive theta trading.

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

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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.

 

 

11 Replies to “Market Recap April 20, 2016”

  1. SolonStephanou SolonStephanou says:

    I have a new found respect for Gino today. Putting together these Market Recaps are tougher than I thought. I kept his basic template and updated the information and added my analysis. I will be working on things to make it prettier to the eye. If you have any questions, please don’t hesitate to post.

  2. Avatar DavidRoyar says:

    great job Solon. I hope to see more post from you. Maybe even a video. The more I read the more it all is coming together. I am knew as of December, maybe in a year or more I will not feel like a neophyte.

    Keep up the good work.

  3. KEITHGIUNTA KEITHGIUNTA says:

    Thanks Solon. Appreciate your work.

  4. Nicholas Kingsbury Nicholas Kingsbury says:

    Great work Solon. Yea I agree I am pretty sure the coaches work harder than most of us realize. Sure makes me appreciate even more our membership is only $97 a month.

  5. Thanks much Solon,
    Great Job!
    yes it is time consuming. Before you know it you can do it in 20 minutes.

  6. Avatar ERICSIMMS says:

    Great recap, Solon!

  7. Avatar Paul Seward says:

    Nice work Solon!

  8. Avatar MingBai says:

    You did great job, Solon, especially the first time

  9. Thomas Hammonds Thomas Hammonds says:

    Much appreciated Solon!

  10. FrancesK FrancesK says:

    Nicely done, Solon! Thanks!

Comments are closed.

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