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Technical Analysis

Good Follow Through For Financials


Yesterday marked a return to the leadership mix that characterized much of the last 6 months.  While breadth was split at +3 to 1 advancers vs. decliners, 93% of Energy stocks, 95% of Financials, and 87% of Industrials were up on the day.  We’re not convinced that Energy marks long-term leadership, but tactically, it is likely washed out enough to bounce.  Financials are exhibiting follow through following Monday’s reversal, and we continue to look to the group in the context of buyable weakness.  While the Consumer Staples sector is back to recent highs, participation is less impressive under the surface with only 54% of constituents in an uptrend (vs. 92% last summer).  We would have expected the 2/10 curve to steepen over the last 48 hours given improved risk appetite, though this has been a holdout so far and is now at an important support level.  This is likely a key chart moving forward.

Globally, French/German spreads have receded and many European markets continue to act well (both the Italian and Spanish bourses hit new highs yesterday).  Portugal is also the latest to turn up following 8 months of basing.  Looking to Asia, the Macau gaming stocks have also turned back up and are consistent with the positive message from that part of the world. 


Just The Second +/- 1% Intra-Day Range Of The Year

 

2/10 Curve Nearing Support... Important Chart & Important Level

Strategas Research Partners' Institutional Investor-ranked Research Team works to identify the major themes with broad implications for global financial markets. Strategas covers the broad investment landscape, with published reports discussing Investment Strategy, Economics, Washington Policy, Quantitative and Fixed Income research. The team's thematic and macro-driven approach relies on empirical data as well as fundamental and technical research to provide readers with an integrated investment strategy for a variety of time horizons.

This article is from Strategas Research Partners and is being posted with Strategas Research Partners’ permission. The views expressed in this article are solely those of the author and/or Strategas Research Partners and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

Federal Reserve Super-Forecasting 102


Here is one way to keep up with the ongoing slate of Federal Reserve speakers, or how to turn their qualitative commentary into quantitative trading data:

Evans: "1 or 2" this year = 66% probability of 2

Fischer: "2 more seems about right" = 90% probability of 2

Powell: "still scope for more rate hikes this year if current path achieved to move slowly towards neutral stance" = 50% probability of 2

Weighted Average = ~70%

Current market implied probability of going 2 more times this year = 75%

Not much downside from here in bond prices, even with something positive on the fiscal front?

*Model Output Source: Rareview Macro LLC

 

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Technical Analysis

iiTRADER Morning Call: E-mini S&P, Crude Oil, Gold & More


E-mini S&P (June)

Equity markets are in the green, but have pared gains from yesterday’s melt-up. The S&P hit our major three star resistance right on at 2361-2363, trading to a high of 2360.50. A move above here will keep the bulls hungry though minor resistance comes in at 2367 with the next key level is 2378.50-2380. The Brexit is in the news this morning but seems to have had little effect on equity markets. Chicago Fed President Evans is scheduled to speak at 8:20 am CT today and Pending Home Sales is due at 9:00. Rosengren and Williams are on tap to speak later today. First minor support comes in at 2349-2350.50 and this aligns with a trend line from the lows. However, the key level to watch comes in at 2344.25 and the bears look to achieve a close below here in order to weaken the tap and open the door to further selling.

Resistance – 2361-2363***, 2367**, 2378.50-2380***, 2397.25-2401***
Pivot – 2349-2350.50
Support – 2344.25**, 2339*, 2333.50-2334**, 2327.75-2329***, 2309.75**, 2389.00-2393.50***

 

Crude Oil (May)

Crude Oil is in the green this morning but off of its overnight high of 48.84 ahead of EIA inventory data. As we discussed yesterday, after a double bottom at 47.08 prices got a further boost when armed forces in Libya slowed production by about 250,000 bpd. Shorts eagerly covered ahead of inventory data as well. Furthermore, there is still a bull camp out there that is fighting to hold longs. We remain bearish and have discussed how critical this level is, we must achieve a close below 47.60-47.70 and now 47.00 as well to send this market sharply lower. EIA expectations this morning come in at +1.35 mb Crude, -1.23 mb Distillates and -1.88 mb Gasoline. It is arguable that production data is more important and we will be keeping a close eye on that today as well.

Resistance –48.98**, 49.48*, 50.14-50.22**, 51.00-51.50***, 52.50-52.78**
Pivot - 48.45-48.61
Support – 47.60-47.71***, 47.09*, 45.78**

 

Gold (June) 

Gold is hanging tough today and though it is in the red, it is off of its low of 1250. Yesterday was option expiration for the April contract and with large open interest at the 1250 strikes for both the puts and the calls, it gravitated towards that level into settlement. For arguments sake, Gold can be considered in the green and is trading higher this morning along with Treasuries, the Dollar and equities. With the U.K imposing article 50 and beginning the Brexit process, the Euro is under pressure while investors have turned to safer assets. Something has got to give this morning and we find it least likely to be Gold.

Resistance – 1264.9**, 1268.1-1270.8****, 1280.8**, 1300**
Pivot - 1251.5-1255.5
Support – 1243.7-1245.3**, 1236.9-1238.5**, 1230.3**, 1223**, 1213**
 

Natural Gas (May)

May natural gas futures are trading with some strength this morning and are at their highest levels since the first half of February.  The technical trend has been stable with the market making higher highs and higher lows, this is much more constructive than the market just moving straight up.  There is inventory data out tomorrow morning, this could have the potential to put more volatility in the market over the very near term.  Weather will be important going forward, but we do feel that much of the bearish news has been priced in at this point.  The market is at top end resistance this morning, a close above could lead to additional short covering in the market. 

Resistance-3.192-3.218***, 3.308-3.311**, 3.507**
Support –3.04**, 2.995-3.001**, 2.891-2.908***, 2.815-2.82**

 

30 yr (June)

Resistance – 152'04-152'12****
Support - 150'20-150'27**, 150'04-150'09**, 148'20**, 147'04-147'15***

 

Silver (May)

Resistance –    18.21-18.30**, 18.54***
Pivot - 18.00
Support – 17.475-17.59**, 17.145**, 16.70-16.82**, 16.41**

 

Euro (June)

Resistance – 1.0868**, 1.0890-1.0911***, 1.0967**, 1.1035-1.1050**
Support – 1.0796**, 1.0748***, 1.0701**, 1.0642-1.0649

 

Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources iiTrader believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

iiTRADER an Independent Introducing Broker, was founded with the goal of making powerful trading capabilities simple and easy to use while, at the same time, providing the complete transparency, market knowledge and trading expertise necessary to help its clients reach their unique trading vision. At iiTRADER, we’re passionate about helping our clients achieve their individual trading goals. Your vision our expertise.

Visit us at www.iitrader.com to learn more about our services and to sign up for a free trial of our morning research.

Bill Baruch is a senior market strategist at iiTRADER with more than a decade of trading experience. He focuses on developing trading strategies for clients that present a clear objective for both long and short-term trading approaches. Bill believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.  Prior to iiTRADER, Bill worked at Lind-Waldock/MFGlobal where he ran a trade desk focused on agricultural commodities and precious metals.

This article is from iiTRADER LLC  and is being posted with iiTRADER LLC’s permission. The views expressed in this article are solely those of the author and/or iiTRADER LLC and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

GUOSEN Closing Bell (March 29)


MARKET

Chinese stocks closed lower today, with the benchmark Shanghai Composite Index ended at 3241.31 points. A-share market fluctuated around the 3250 points support level, as the newly-listed stocks tumbled but “One belt and one road” related stocks leaped. Chinese investors concerned the liquidity would tighten in the near term, as PBOC skipped the open market operations of reverse repurchases for the fourth consecutive day. Transportation and Coal sectors led the gains; while Telecommunication and IT sectors led the falls. Combined turnover for both markets was CNY 539.5bn, up 15.87% dod.

 

 

Close

% Change

Vol (bn CNY)

%YTD

Shanghai

3241.31

-0.36

245.37

4.44

Shenzhen

10520.82

-0.40

294.69

3.38

CSI 300

3465.19

-0.13

114.66

4.69

ChiNext

1929.20

-0.78

80.13

-1.67

 

Sector

Top 1

Led by

Top 2

Led by

Upward-leading

Transportation

600317

Coal

600971

Downward-leading

Telecommunication

300578

IT

300598

 

NEWS

*China's central bank skips open market operations. China's central bank on Wednesday skipped the open market operations of reverse repos, siphoning liquidity from the market. This was the fourth consecutive business day that the People's Bank of China (PBOC) has halted the open market operations of reverse repos, a process where it purchases securities from banks with an agreement to sell them back in the future. (Xinhua)

*Memo gets tough on import-export outfits. China released its first memo imposing dozens of punitive measures against discredited trading companies to further facilitate and safeguard trading activities, especially with economies linked to the Belt and Road Initiative, senior customs officials said. (China Daily)

*Faster drug approvals. China has issued a draft rule that would speed up the approval process for pharmaceuticals, promising patients faster access to new, advanced drugs for cancer, cardiovascular and other diseases. The China Food and Drug Administration is soliciting public comment on the draft through April 20. Of primary interest is a stipulation that foreign drugs will no longer have to win approval overseas or have undergone second-and third-phase clinical trials abroad before they can be tested in China. Under current rules, new drugs of multinational pharma companies typically wait years to be introduced in the domestic market. (Shanghai Daily)

 

FUND FLOW

 

Click here for more information about Guosen.

This article is from Guosen Securities Co., Ltd. and is being posted with Guosen Securities Co., Ltd.’s permission. The views expressed in this article are solely those of the author and/or Guosen Securities Co., Ltd. and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12772




Macro

European Market Outlook: GBP Drops. PM May Set to Enact Art. 50; Asia Stocks Mostly Higher


Morning Briefing March 29th 2017


There is plenty of data on the calendar Wednesday, but undoubtedly, the main feature of the day will be the UK Government finally firing the starting gun on Brexit.

The European calendar gets underway at 0600GMT, with the release of the German import/export prices data. At 0645GMT, the French consumer sentiment indicator will be released.

At 0800GMT, Italy's ISTAT will publish the March Consumer and Business Confidence data.

In the UK, the Bank of England will release the money and credit report, including the February mortgage lending.

At 1200GMT, UK PM Theresa May will hold the last PMQs of the current session, ahead of Thursday's break for the Easter recess. Following PMQs, May is expected to deliver a statement to the House, noting the Government has delivered the Article 50 notification to EU leaders and laying out the expected terms of Brexit.

This is likely to be the start of a further 'phony war' in Brexit discussions, as only modest response is expected from Brussels before the outcome of the French presidential election.

At the same time, the US calendar gets underway, with the release of the MBA weekly applications index.

At 1320GMT, Chicago Federal Reserve Bank President Charles Evans speaks at the DZ Bank-OMFIF International Capital Markets Conference in Frankfurt, Germany, with audience and media Q&A.

The US NAR pending home sales will be released at 1430GMT, with the DOE weekly crude oil stocks expected at 1430GMT.

Boston Federal Reserve Bank President Eric Rosengren speaks on economic outlook to the Boston Economic Club in Boston from 1530GMT.

At 1650GMT, ECB Executive Board member Peter Praet speaks at the "2017 Harvard Law Europe - US Symposium on International Financial Systems", in Frankfurt.

San Francisco Federal Reserve Bank President John Williams delivers a presentation to the Forecasters Club of New York titled "From Sustained Recovery to Sustainable Growth: What a Difference Four Years Makes," in New York, N.Y., with audience and media Q&A, starting at 1715GMT.

 

Global Economic Trading Calendar


 

Markets


SNAPSHOT: Below gives key levels of markets in the second half of the Asia-Pac session: 

- Nikkei 225 down 19 points at 19,183.64

- ASX 200 up 51 points at 5,872.70

- Shanghai Comp. up 3.75 points at 3,256.71

- JGB 10-Year future down 2 ticks at 150.43

- JGB 10-Year yield up 0.4bp at 0.061%

- Aussie 3-Yr future down 2 ticks at 98.04, 3-Year yield up 1.9bp at 1.917%

- Aussie 10-Yr future down 3 ticks at 97.235, 10-Year yield up 3.1bp at 2.730%

- US 10-Year future down 2+ ticks at 124.09.

US TSY/RECAP: US Tsys ended Tues lower after an afternoon decline that accelerated toward the end of the day Tsys hurt by firm stocks, heavy high-grade corp. bond issuance and general risk on sentiment engendered by strong consumer confidence data - Traders say positioning indicates that the market has fewer shorts vs recent weeks.  US T-Note futures opened Asia-Pac at 124.09, last at 124.08+, 10-Year yield unchanged so far at 2.42%.

BOJ: The Bank of Japan offered to buy a total of Y1.13 trillion of Japanese government bonds (cut the scale of JGB buying with a remaining life of 3 to 5 years to Y380 billion from Y400 billion but left others unchanged from the previous operations, Y300 billion with a remaining life of 1 to 3 years, Y380 billion with a remaining life of 3 to 5 years and Y450 billion with a remaining life of 5 to 10 years).

AUSSIE BONDS: Aussie bonds sold off during the US session, mirroring the move in US treasuries as US stocks snapped an 8-day losing streak. US treasuries were also pressured by large corporate issuance and the consumer confidence data at its highest since 2000. The AOFM sold A$800mln of 10-Year paper today to decent demand, yields rose into the deadline, since come off 2bp. No Aussie data on the calendar for today.

JAPAN STOCKS: Japanese stocks have moved between gains and losses in the first part of the session, initially opening around 50-points higher, started immediately retracing this move, went as low as 19,164 (-38 points). Energy is the best performing sector on the Nikkei, WTI is building on gains seen during the US session after retaking the $48/bbl handle, last up $0.12 at $48.49. Nikkei 225 last up 15 points at 19,218.25, Topix last down 4.68 points at 1,540.14.

JGBS: JGB's have seen a subdued session in Asia compared to their moves during US hours. After initially ticking higher by around 13-ticks, strong US consumer confidence saw a flight to risk on in the US. Selling in US treasuries bled into JGB's and around half of this move was retraced. Asia-pac participants finished off the job, and in the early part of the.

OIL: Oil is slightly higher in Asia-Pac trade, managing to sustain gains from the US session where WTI retook the $48/bbl handle. News that Libya have halted output from Sharara, their largest field, has been supportive of the upside, with the move higher moderated by a slightly higher than expected build in US inventories at the API report.. WTI last trades up $48.56, $0.18 higher.

GOLD: Gold is slightly lower in Asia-Pac trade, as mostly higher stocks and stronger US$ following decent US consumer confidence figures saw gold lose some of its appeal to investors. Gold last trades down $2.90/oz at $1,248.93.

FOREX: Unusually for Asian markets sterling took centre-stage, the pound was came under intense selling pressure, the rate dropping violently from $1.2462 to $1.2377 in just over half an hour. Some analysts put the move down to the starting of the Brexit process, with PM May earlier signing Article 50 to commence divorce proceedings from the EU, that said, it was fully expected and should not have come as a shock, it was more likely flow driven in an illiquid market. Cable was last at $1.2415. Dollar-yen, supported by slightly firmer UST yields traded higher from Y111.03 to Y111.32 and was last at Y111.28. Aussie-dollar climbed higher from $0.7631 to $0.7657, the move was largely cross driven with Aussie being bought against sterling, kiwi and yen. Aussie was last at $0.7645. Meanwhile, Euro-dollar was in consolidation mode and held a tight $1.0808 to $1.0827 range, last at $1.0817.).

 

Technical Analysis


BUND: (M17) Pressure Remains On 100-DMA

*RES 4: 161.78 High Mar 3
*RES 3: 161.60 High Mar 2
*RES 2: 161.00 High Mar 27
*RES 1: 160.71 High Mar 28

*PREVIOUS CLOSE: 160.26

*SUP 1: 160.14 100-DMA
*SUP 2: 160.04 Hourly support Mar 24
*SUP 3: 159.73 Low Mar 24
*SUP 4: 159.38 Alternating hourly support/resistance    

*COMMENTARY: Bulls managed to work their way through layers of resistance Monday only to have the break above 160.81 rejected and the contract remaining heavy at the close. The lack of follow through on Tuesday’s spike retains pressure on the 100-DMA. The 159.73 support remains key with a close below needed to gain breathing room and return pressure to the 158.73-159.09 supports. Bulls continue to look for a close above 161.00 to shift initial focus to 161.60-78.

 

EUROSTOXX50: Pressure Returns To 2017 High

*RES 4: 3554.44 High Aug 18 2015
*RES 3: 3524.04 Monthly High Nov 30 2015
*RES 2: 3476.89 Bollinger band top
*RES 1: 3471.50 2017 High Mar 2

*PREVIOUS CLOSE: 3465.07

*SUP 1: 3437.67 Low Mar 28
*SUP 2: 3413.58 21-DMA
*SUP 3: 3411.48 Low Mar 27
*SUP 4: 3390.04 Low Mar 14

*COMMENTARY: Bears remain unable to capitalize on dips with the index bouncing from ahead of the 21-DMA and layers of support Monday. Layers of support remain with bears now needing a close below 3411.48 to hint at a correction and below 3324.94 to end bullish hopes and shift focus lower. Bulls look for a close above 2017 highs to add support to the case for a test of 3524.04 Nov 2015 monthly highs.

 

Eurex Futures Market Close


 

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This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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