Trade of the Week Market Watch

Beyond the Money

Commentary from Chuck Miao



 

What to watch in the market this week (4/14/2014)

By Chuck Miao

There was lots of selling in the market last week (4/7 – 4/11). Even though there might be an attempt to rebound on Wednesday (4/9), market had a big selloff on Thursday (4/10) before J.P. Morgan (JPM) and Wells Fargo (WFC) reported their earnings the next day (4/11). For the whole week (4/7 – 4/11), S&P 500 Index (SPX) was down 2.6%; Dow Jones Industrial Average (DJIA) was down 2.4%; Nasdaq Composite Index was down 3.1%, according to the Briefing.com.

J.P. Morgan’s (JPM) earnings missed forecast while Wells Fargo (WFC) beat the expectation on Friday (4/11). Technically, after last week’s big selloff, S&P 500 Index (SPX) was approaching its 150-day moving average near 1800 last Friday (4/11). Volatility index (VIX) jumped to 17 to 18 levels later in the week from 12 to 13 levels during early week. I think the market may potentially have reached some oversold conditions and may possibly due for a rebound in the near term. Its near term resistance may probably exist near 1840 to 1850 area. Its 200-day moving average line near 1770 levels may likely serve as its next strong support level.

As we enter the second quarter, it will be interesting to see how analysts on the Wall Street may forecast the earnings for the rest of the year. Based on a report from Marketwatch.com, first-quarter earnings are expected to decline 1.6% from the year-ago period, down from forecasts of 4.3% growth in January, according to FactSet. Analysts expect earnings growth of 7.7%, 11%, and 11% for the second, third, and fourth quarters, respectively, according to the same report. If these numbers are what investors may expect, we probably should not be surprised to see the selloff from last week. In fact, if these numbers can potentially be close to what the reality may be, I think we may possibly see the market gradually start to improve from here. Only time will tell.

This week will be a short one due to the Good Friday holiday on Friday (4/18). Market will close on that day (4/18) and the regular April options expiration day will move to Thursday (4/17) instead. I think we may likely see market rebounding somewhat due to the holiday spirit and also because of the potential oversold condition in the market place.

There will be more earnings releases from major companies this week (4/14 – 4/18). On Tuesday (4/15), Intel and Yahoo will release their earnings; on Wednesday (4/16), Google, Bank of America, Capital One and American Express will release theirs; on Thursday (4/17), General Electric, Goldman Sachs and Morgan Stanley will report theirs.

Last week WTI crude oil kept climbing; May crude futures contacts (CLK4) traded as high as 104.44 on Friday (4/11). In the near term, I think CLK4 may probably trade between 101 and 105 levels.

Last week June gold futures contracts (GCM4) climbed back above 1300 levels as well. However I don’t see any strong convictions in either direction. GCM4 may potentially consolidate between 1280 and 1350 levels in the near term.

Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.

Have a great trading week and Happy Easter!

Contact me at cmiaoweb[@]chesapeakeinvestment.com

Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.


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What to watch in the market this week (4/7/2014)

By Chuck Miao

Last Friday (4/4) Department of Labor released March employment data. According The Wall Street Journal, U.S. economy added 192,000 jobs in March and all of which came from private sectors. In the meantime the jobs number for January and February was revised up by 37,000 in total. The unemployment rate stayed at 6.7%, according to the same report.

Market reacted positively to the news initially. S&P 500 Index (SPX) made another record high at 1897.28 right around the opening time on Friday (4/4) before it started to pull back. SPX closed down about 30 points from its high at 1865 by the end of Friday (4/4).

For the whole week (3/31 – 4/4), S&P 500 Index (SPX) was up 0.4%; Dow Jones Industrial Average (DJIA) was up 0.5%; Nasdaq Composite Index was down 0.7%, according to the Briefing.com.

I think the sell-off towards the end of last week could possibly come from two reasons. Technically, the market might potentially reach an overbought condition after four consecutive days of gains since SPX started running up from 1850 levels on 3/28. Secondly, after a “so-so” jobs report on Friday (4/4), I think some market participants might start taking some profits and try to stay on the sideline before the upcoming earnings season. Overall speaking, SPX stayed within the 1830 to 1900 trading range over the last month or so. The 50 and 100-day moving average lines of 1840 and 1820 area may possibly show some strong supports in the near term. In addition, its 150-day moving average line near 1800 level may demonstrate even stronger support, if the 1820 to 1840 support areas may be broken. I think the overall trend for the broad S&P 500 Index (SPX) may probably be up after the latest turmoil in the market place.

However, the NASDAQ Composite Index (COMP) may look a little more bearish to me. On Monday (4/7) it already reached near its 150-day moving average line around 4060 levels. If it cannot hold that level, I think there may be a chance for COMP to test its 200-day moving average line near 3950 levels.

Again, I think this recent pullback largely was due to the cautiousness from investors in front of the earning season beginning on Tuesday (4/8) when Alcoa (AA) will report its first quarter earnings. If companies may likely show promising earnings results, I think the market may quickly turn around to regain the lost ground over the last several days. Especially after the heavy selling on Friday (4/4) and Monday (4/7), the broad market index (SPX) may have reached somewhat oversold condition. However the market volatility also increased somewhat over the last several days; SPX volatility index (VIX) jumped up from 13 levels last week to around 15 to 16 levels on Monday (4/7).

Last Wednesday (4/2) the Energy Information Agency (EIA) released U.S. crude oil inventory report. According to this report, U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased by 6.6 million barrels from the previous week and reached 382.5 million barrels. Nonetheless crude oil price kept moving higher after the report. By the end of last week (3/31 – 4/4) May WTI crude oil futures contracts (CLK4) traded above $100 per barrel again. I think in the near term CLK4 may potentially trade between 97 and 103 levels.

June gold futures contracts (GCM4) tested 1270 levels last week and bounced back to 1300 levels by the end of the week. I think 1240 to 1250 area may possibly be critical for the gold price. So long as GCM4 can hold that level, I think it may probably continue its upward movement starting from the beginning of the year. Otherwise, it may go down to retest its lows near 1180 levels made last December.

Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.

Contact me at cmiaoweb[@] chesapeakeinvestment.com

Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.


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What to watch in the market this week (3/31/2014)

By Chuck Miao

It was relatively quiet in the market place last week (3/24 – 3/28). S&P 500 Index (SPX) traded within the range of 1840 and 1880 for the whole week. However Nasdaq 100 Index (NDX) broke its 50-day moving average line near 3600 level and reached a low of 3543 on Thursday (3/27), while S&P 500 Index (SPX) held its 50-day moving average line near 1830 levels.

For the whole week (3/24 – 3/28), S&P 500 Index (SPX) was down 0.5%; Dow Jones Industrial Average (DJIA) was up 0.1%; Nasdaq Composite Index was down 2.8%, according to the Briefing.com.

Technically, SPX may possibly use its 100-day and 50-day moving average lines near 1820 to 1830 levels as its support area in the near term. The overhead resistance may probably reside near 1880 to 1890 levels in the meantime. I think if NDX can hold its 3500 levels, SPX may potentially be able to hold 1820 to 1830 support levels as well.

May WTI crude oil futures (CLK4) traded higher and broke its 100 levels last week. I think it’s possible for crude oil to pull back some more in the near term. If CLK4 breaks below 100 levels again, I think it may likely continue to trade lower towards 94 to 95 levels in the near term.

April gold futures contracts (GCJ4) kept sliding back last week. It also broke its 50-day moving average line near 1300 levels last week and reached 1280 levels. I think its next support area in the near term may probably reside between 1250 and 1270 levels, which is also its 100-day moving average line area. If GCJ4 can hold this area, I think it may potentially come back to test it 20-day moving average line near 1320 levels. If it may break the 1240 levels, there is a chance to test its low level around 1180 soon.

This week there will be some important economic data. On Tuesday (4/1) ISM manufacturing index will be released; on Thursday (4/3) ISM service index will be released; on Friday (4/4) non-farm payrolls number will be released. We may likely see U.S. market moving around surrounding these data points. Overall the market may still be in a relatively low volatility period. The volatility index (VIX) is currently between 13 and 14 levels.

Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.

Have a great trading week!

Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.


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What to watch in the market this week (3/24/2014)

By Chuck Miao

Last Wednesday (3/19) Federal Reserve Chair Janet Yellen held her first press conference after the FOMC meeting. During the meeting she was asked about when the Federal Reserve would consider raising the interest rates after the completion of current bond purchasing program. Her answer was about six months. If the Fed will complete its bond purchasing program in September this year, based on its current pace of reductions, the Fed may start considering raising interest rate next April, about one year from now. This was probably a little earlier than the market’s consensus before the press conference. S&P 500 Index (SPX) traded lower by about 20 points after Yellen’s comment on the same day (3/19), but market gradually recovered towards the end of the week. On Friday morning (3/21) SPX made another intraday record of 1883.97.

For the whole week (3/17 – 3/21), S&P 500 Index (SPX) was up 1.4%; Dow Jones Industrial Average (DJIA) was up 1.5%; Nasdaq Composite Index was up 0.7%, according to the Briefing.com.

Technically, SPX may possibly use its 20-day moving average line near 1860 levels as its first support level. If this area cannot hold, a much stronger support may potentially show up at its 50-day moving average line near 1830 levels. I think SPX may likely trade between 1830 and 1890 range in the near term.

May WTI crude oil futures (CLK4) traded higher towards 100 levels last week. As spring arrives, I think we may probably see WTI crude oil price move somewhat lower towards 95 levels in the near future. Near term trading range for CLK4 may potentially be within 95 to 100 levels.

April gold futures contracts (GCJ4) kept sliding after hitting 1392.6 last Sunday (3/16) night. On Friday (3/21) it traded below its 20-day moving average line near 1350. I think its next support may possibly reside near 1300 levels

Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.

Have a great trading week!

Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.


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What to watch in the market this week (3/17/2014)

By Chuck Miao

U.S. market traded steadily lower towards the end of last week, possibly due to investor’s cautiousness before the referendum in Crimea on Sunday (3/16). S&P 500 Index (SPX) broke its 20-day moving average line near 1850 levels and finished the week at 1846.34.

For the whole week (3/10 – 3/14), S&P 500 Index (SPX) was down 2.0%; Dow Jones Industrial Average (DJIA) was down 2.4%; Nasdaq Composite Index was down 2.1%, according to the Briefing.com.

Technically, SPX broke its 20-day moving average line near 1850 last week. I think its next support level may potentially be its 50-day moving average line near 1830 level. As SPX volatility index (VIX) jumped up to 18 from 14 levels last week, I think SPX may probably have gone into a slightly oversold condition.

This week market participants may likely focus on the outcomes from the FOMC meeting this Wednesday (3/19). Of course the situation in Ukraine may possibly continue to be the focus as well. I think SPX may potentially trade a little bit lower towards 1820 to 1830 levels in the near term. However, I don’t think it may break down 1800 levels in the meantime. If the political tension in Ukraine may probably ease and there are no negative surprises from the FOMC meeting, I think SPX may likely turn around and rally towards its most recent high near 1880 levels again soon. This Friday (3/21) March stocks and stock index options will expire. I think we may potentially see some kind of rally towards the end of week after the selloff last week.

April WTI crude oil futures (CLJ4) fell below 100 levels last week and traded as low as 97.55 on Wednesday (3/12). I think CLJ4 may possibly trade between 95 and 100 levels in the near term.

April gold futures contracts (GCJ4) broke out of its 1360 level resistance last week as the political uncertainty in Ukraine may have increased the demand for gold from global investors. On Sunday night (3/16) GCJ4 traded as high as 1392. I think 1400 to 1420 levels may probably become its next levels of resistance for GCJ4 contacts in the near future. 1330 to 1350 area may likely become its support levels in the near term.

Last week there were reports from The Wall Street Journal that indicated U.S. Congress was considering plans to replace Fannie Mae and Freddie Mac in the mortgage business. Both Fannie (FNMA) and Freddie (FMCC) stocks were sold off from $6 levels to near $3 before recovered to $4 levels. On Sunday night (3/16), according to The Wall Street Journal, U.S. Senate released a draft of the plan to replace Fannie and Freddie with a new system called FMIC (Federal Mortgage Insurance Company). Fannie and Freddie could be sold in part to seed the new system according to the same report. I think investors who take positions in these stocks need to be very careful with the situations and make wise decisions of whether they really want to take the risks of holding these company stocks going forward.

Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.

Have a great trading week!

Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.


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TRADING FUTURES AND OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. THERE ARE NO GUARANTEES OF PROFIT NO MATTER WHO IS MANAGING YOUR MONEY. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THERE IS UNLIMITED RISK OF LOSS IN SELLING OPTIONS. AN INVESTOR MUST READ AND UNDERSTAND THE COMMODITY TRADING ADVISOR'S CURRENT DISCLOSURE DOCUMENT BEFORE INVESTING.