Weekly Raid #23 - Saddle Up
Good Morning Traders
A lot to cover this morning, but first lets take a moment to appreciate that NVDA went for 7% yesterday. Long ATM options from last week would have made you a small fortune(depending on size) and there was plenty of flow to signal a reason to enter.
Now on to today!
News of the day
We have a few things on tap today, first up at 8:30 EST are export and import prices. These could have a small impact on some futures, but I think overall this wont impact the market much.
Also at 8:30 though is the Retail sales number. And given the crappy data coming out of China overnight and the news of India’s oil purchase (more on these below), you could postulate that if Retail sales misses we could be in for a bumpy ride. Match that with the mild selloff in futures overnight and I think the stage is set for a wild open.
Now on to the fun stuff.
First up is Oil, we talked about this last week, and it is back as promised this week. But the problem this week is slightly larger, India made its first oil purchase using its native currency, the Rupee. This is a huge potential issue for the US, because what is keeping the dollar and really inflation rates even somewhat stable (loose term I know), is that we are the world reserve currency. Without the PetroDollar we are in for a wild wild ride.
Now its not all doom and gloom, yes this is a huge issue, but we still have US debt scattered around the globe like some kind of sick game of hide and seek. So there is a vested interest in keeping the US on top until we pay off at least some of the debt other nations have bought. But this is not a permanent solution. Personally I think this is what its a solid idea to have some form of alternative investment like gold or silver. And before anyone goes crazy the bad 4 letter word “GOLD”, you diversify your portfolio, no reason no to do it with your money as well.
Next up on todays list is the Chinese. A whole host of poor economic data came out last night, and all of it was dismal. It was so bad in fact that the Chinese state will no longer publish certain pieces of econ. data.
This type of thing does not just sneak up on you like they would like to have you believe. A lot of folks have been talking about how fragile the Chinese economy is for a while, all this does is prove that you can’t trust economic data from a state controlled source….What does that tell you about my confidence in the US data.
They also cut rates last night, so I think there is beginning to be a global shift from tightening to easing again as things get tough in a meaningful way. Once our own Fed shift policy, I think you see a recession set in in earnest. Historically, when policy shifts back is when the recession sets in. Let’s see if this time is different.
Given all the news overnight I will be watching Bonds today. Both the Ultras on the Futures markets and TLT on the equities front.
Watching SPY as well today. If we do end up selling off, SPY is liquid and easy to trade around. The options books are also pretty thick so you can move about easily. This is the stuff thats important in a sell off.
I will also be watching some of my longer term plays like ENVX and O for entry locations to add to a position. I am not watching for any particular location, just some place to dollar cost average into them.
Finally NVDA, not one to attempt to catch the knife on a trade, the pattern on NVDA looks to be a nice rounded top. We also have a TON of poor structure from 370 all the way down to 320. I am not saying we get there all in one shot, but when it falls be prepared to fall hard.
Be sure that you are taking profits, its great to hold to the moon, but that doesn’t pay your bills. Remember to close out of some of the positions and do something good with the money like pay bills or buy other assets.
As always trade well and Good Luck