Robust hiring in May pretty much guarantees the Fed will move forward with a couple half-point rate hikes at the next two meetings. ? US stocks edged lower as the latest employment report showed slower job growth and potentially softening inflation, but still keeps the door open for the Fed to continue with its rate hiking campaign well beyond the summer. Softer hiring and cooler wage data suggest that economic growth moderation is happening, but not fast enough to signal a change in course by the Fed. The consumer might be losing the battle with inflation, but spending won’t be weakening so quickly. Stocks may struggle here as the Fed needs to get rates closer to neutral before what seems to be a likely winter slowdown. … [Read More...]
US Close: Market jitters ahead of Fed and massive earnings week, Netflix tanks
Wall Street has gone from debating how aggressive one should rotate out of tech into cyclicals, to sell it all. US stocks have been on a rollercoaster ride after abysmal results from Netflix. Investors have two big worries: it seems every day traders are reminded inflationary pressures are not going away anytime soon and could prompt the Fed into becoming overly aggressive in tightening monetary policy. The other concern is that profit growth expectations may have been too optimistic and underpriced in the ballooning labor costs. Geopolitical risks are also adding fuel to the selling pressure. Next week will be massive for tech earnings as Apple, Microsoft, Tesla, and Samsung report. Netflix shocked and if the other mega-cap giants hugely disappoint, the Nasdaq will be in … [Read More...]
US Close: Wage inflation worries send stocks lower, US data
US stocks struggled after the big banks had a rough start to earnings season. JPMorgan shares dropped sharply over fears that surging expenses and wage inflation may lead to a greater profit miss over the next couple of years. Risk appetite did not get any favors from a wrath of US economic data that missed expectations, raising fears that the underlying recovery is vulnerable. The great cyclical rotation was reversed today and even though Treasury yields soared higher, tech stocks caught a bid. US data US retail spending decreased by 1.9% in December, much worse than the expected 0.1% decline. Online sales fell by 8.7%, but that should not be the beginning of a trend. Americans most likely got their holiday shopping done early and the spread … [Read More...]
Year End Summary – 2021
I had a good year financially considering the distractions I had. We all had to deal with COVID, even if we didn’t catch it ourselves. I also had my ex-wife with Alzheimer’s living with me until a few weeks ago, had my fourth back surgery, my dad had cancer (successful) surgery, and my son is a senior in high school. To deal with the stress of the year, I spent more time out running trails in various parks around metro Atlanta and less time focused on my own investment accounts after working on my clients’ accounts. While my health is in a good place now, I missed a lot of gains in the stock market by being more passive than I usually am. My … [Read More...]
Week Ahead – Dollar declines after massive payrolls miss; Focus shifts to inflation
Wall Street went on a wild ride after a huge nonfarm payroll report miss reaffirms the Fed’s stance to do nothing. A massive slowdown in hiring was not expected and the knee-jerk reaction across the bond market might have paved the way for further dollar weakness. The US economic recovery will likely take a lot longer than many have initially expected as concerns grow that the issue with the labor market is more of a supply problem. The aftermath of the massive payroll’s downside surprise will have many investors shift the focus to pricing pressures. Everything is starting to cost more, and employers may need to be prepared to increase wages. The big economic release of the week will be the US April inflation report, which … [Read More...]
Month End Summary – November 2020
November kept the trend going for me and added to may gains for the year. The bounce back in QQQ was a big help and more than made up for the paper losses on my short TLT shares. I remained too timid after the election and missed some upside, but didn’t want to blow my gains for the year if I was correct in my hesitation. I’d love to see a solid 10% correction so I could dive in deeper, but that might not come for a few months based on the euphoria that’s still out there on election finality and vaccine expectations. My account ended November with a Net Asset Value (NAV) of $111,798.00 according to Interactive Brokers (IB) after ending October with … [Read More...]
US Close – Stocks bounce back on sales and sentiment data, Oil choppy on Libya concerns, Gold remains stuck
US stocks pushed higher after a mixed bag of data made investors focus on the resilience of the American consumer. Risk appetite made a return after retail sales posted a larger-than-expected increase. Earlier, an incremental update with Pfizer’s coronavirus vaccine boosted optimism that they could seek emergency use authorization sometime in November. Pfizer’s news really didn’t reveal anything new but was considered positive given the last couple of coronavirus updates announced pauses in clinical trials with J&J (vaccine) and Eli Lilly (treatment). The US industrial production reading for September was a big miss and exemplifies concerns that the manufacturing recovery has hit a wall. Stocks held onto their gains given the greater importance the retail sector is compared to manufacturing. The preliminary consumer sentiment … [Read More...]
Month End Summary – September 2020
September wasn’t a good month for my account, but wasn’t as bad as the major indexes, so that’s something. In another rare move, I made no trades in this account in September, as I missed the opportunity to sell a QQQ covered call before the sell-off in Tech. The silver lining on QQQ is that I didn’t panic at the bottom of the correction and sell a covered call then, more than $20 below the current trading price. Before long, I’ll take the risk of capping my gains to lock in some profit. I’m still working my TLT position, but might not replace my naked calls immediately when they expire in October. I’m expecting bonds to push higher with … [Read More...]
SPY Chart – YTD Through July 2, 2020
The chart below shows the daily prices for SPY, an ETF that tracks the S&P 500 Index, after closing the week at $312.23 on July 2, 2020. SPY is up more than 43% from its intraday low on March 23, but has struggled since hitting a three-month high on June 8, nearly a month ago. The Williams %R technical indicator gave a false positive buy signal at the beginning of March, but was accurate on the second signal. This misleading signal is common when a stock or index falls deeply over a short period. In Wall Street’s unique jargon, this is called a “dead cat bounce” and most market veterans know to look for it before buying. On June 8, Williams %R gave the reverse signal and buyers backed … [Read More...]
UK100 – Vulnerabilities Appearing
OANDA Senior Market Analyst Craig Erlam talks about the UK100 (FTSE 100) and asks whether it’s starting to show signs of topping out. [Read More...]
Month End Summary – February 2020
I picked a great time to be under-invested this time. The trick will be getting fully invested before the fall has reversed itself. My QQQ April $225 naked put doesn’t worry me long-term, even though it finished February almost $20 in the money. It’s less than a quarter of my account value, which leaves a lot of dry powder on the side if the weakness continues and stocks fall much deeper. The same goes for my TLT April naked calls that finished February more than $6 in the money. Both will reverse over time and I’ll work a profit. Call it luck or skill, but being under-invested makes the paper losses on these two positions easy to digest. My account ended … [Read More...]
OANDA Market Insights – Episode 111 (Podcast)
Jazz FM Presenter Jonny Hart speaks with OANDA Senior Market Analysts Craig Erlam and Ed Moya about the week’s events and preview the week ahead. On the agenda this week is negative oil prices, earnings season and more. [Read More...]
Squawk: US equity indices look vulnerable to another correction lower Despite…
US equity indices look vulnerable to another correction lower Despite positive soundings from the US-Sino trade talks over the weekend early US equity market strength at the very start of this week… [Read More...]
Squawk: Short @ 7182 SL 7135 TP 7100
Short @ 7182 SL 7135 TP 7100 [Read More...]
OANDA Market Insights – Episode 106 (Podcast)
In another unprecedented week, Jazz FM Business Breakfast presenter Nick Howard speaks to OANDA Senior Market Analyst Craig Erlam. They discuss the latest on coronavirus and the response from central banks and governments around the world. [Read More...]
Squawk: 10 Year US notes German BUND and EURUSD By Gregor…
10 Year US notes German BUND and EURUSD By Gregor Horvat Interaction between the above from an Elliott Wave perspective. See full article here: htt… [Read More...]
Month End Summary – January 2020
January was a blah month by the end. It began with what appeared to be a missed opportunity for me, but I remained cautious and waited for a better entry point. The result was that my account barely moved and is in between the losses of the Dow and S&P 500, which is not much. I’m still wary of what might cause the market to move in either direction. The coronavirus is developing still and we don’t know how much of an economic impact it will have. I expect a few more rough days in the near-term and then maybe the market will reset after a solid consolidation phase. If we have a relatively calm week, I might start dipping my toe deeper into … [Read More...]
Trade Optimism and Easy Money Set to Drive Stocks to Fresh Record Highs
The bull story for the rest of the year remains in place as trade war angst ebbs, the stimulative effect from lower rates kicks in, the US consumer remains resilient and credit markets show money is still available. The S&P 500 could rally another 3-5% as long as we don’t see a policy mistake by the Fed and a complete collapse in trade war. As we approach earnings season, the consensus is likely to see stocks deliver hardly any earnings growth over the next 12 months, with a strong economic recovery seeing 12% gains, and recession led collapse seeing 15% drop. With the trade war lingering longer than most have expected, business investment is continued to remain stagnant. If we start to see a lot of pre-announcements … [Read More...]
Squawk: US equity indices question the immediate bull trend A rally…
US equity indices question the immediate bull trend A rally and then a plunge back lower on Wednesday for the major US equity averages after the FOMC rate decision statement and conference. The… [Read More...]
Month End Summary – March 2019
March was a pretty good month for my account, although I’m still not too close to being fully invested like I should’ve been after the recent small price dip for stocks. While I’m still nervous about when (not if) we will have another meaningful correction, I need to stick with my trading to stay up with the good times while we have them. My account ended March with a Net Asset Value (NAV) of $90,005.66 according to Interactive Brokers (IB) after ending February with a NAV of $89,304.93. I had a gain of $700.73 (~0.78%) on paper for March (ahead of the Dow’s 0.05% gain and below the S&P 500’s 1.79% gain for the month). I had $113.70 in net … [Read More...]