Category: INO.com Contributors

A Market Festivus

Posted on by Gary Tanashian

They say that Festivus is the “anti-Christmas”, but in this case we are going to call it the anti-Christmas Eve as the markets close out 2018’s Christmas Eve massacre.

“Many Christmases ago I went to buy a doll for my son. I reached for the last one they had, but so did another man. As I rained blows upon him I realized there had to be another way!”

This year markets are going another way.

Market festivus

We have been managing a potential Christmas Eve close-out sale in the stock market since SPX hopped the Bull Turnstile, negating topping potential and confirming bullish ascending triangles (not shown below as they appeared on daily charts) and its own major trends by breaking upward. Here is the most recent chart (from NFTRH 582) used to illustrate the situation.

Please consider this weekly chart for reference only. We had a lot of words in #582 about what I think is in play, but ultimately this public post is simply illustrating what is currently in play. And that is an upside extension (with associated sentiment readings to be updated this weekend in NFTRH 583) that would be roughly equal and opposite to the 2018 downside blow off (note: though the chart allows for higher levels, SPX has already qualified for a price and sentiment close-out, in the general spirit of the season). The blue box is the same height as the yellow shaded area. It’s more art than TA, but there you have it… some frame of reference. Continue reading "A Market Festivus" →

American Shale Oil In High Demand

Posted on by Robert Boslego

The narrative a while back was that the world would face a shortage of heavy crude because sanctions on Iran and Venezuela had reduced production and exports. Some also implied that shale oil would fill up U.S. storage because American refiners were designed to process the heavy, high sulfur crudes from Venezuela, Saudi Arabia, and the like.

But the light, sweet crude is in high demand for export, and that appetite is likely to continue to grow with the implementation of IMO 2020 around the corner, going into effect January 1st. Freight rates from the U.S. Gulf to Europe have surged to record highs.

Equinor ASA and Unipec, the trading arm of China's top refiner Sinopec, have provisionally chartered Aframax tankers for $60,700 per day, an increase of almost 30 percent in a week, a new record high, according to shipbroker Poten & Partners. Aframax tankers are the “workhorse” of the U.S.-Europe oil trade, which has risen more than 60 percent in 2019 compared to 2018.

The EPIC pipeline began service in August. It has the capacity to deliver 400,000 b/d from the Permian Basin to terminals on the Gulf Coast.

The new Cactus II pipeline system also started shipping crude oil in August. It has the capacity to deliver 670,000 b/d of crude oil from the Permian.

And the Gray Oak pipeline began service in November and will be capable of delivering 900,000 b/d at capacity.

This new takeaway capacity will effectively reduce the production breakeven costs of substantial Permian crude oil because the pipeline charges are significantly lower than trucking costs.

This should provide stimulus to shale oil production growth, which had slowed due to takeaway pipeline capacity constraints. Continue reading "American Shale Oil In High Demand" →

Gold & Silver: Santa Claus Rally Postponed

Posted on by Aibek Burabayev

Both metals missed the time targets, which were set on the 13th of December for gold and on the 20th of December for silver in the previous post as I was expecting the Last Drop Ahead Of Santa Claus Rally.

I updated the charts below and went deep into the anatomy of the current consolidation in the "bc” segment to show you in detail what holds the price for so long delaying the last drop. For that reason, I switched to a lower time frame of 4-hour.

Let me start with the silver chart as it has a less complicated structure than gold, and I will use it as a navigator.

Chart 1. Silver 4-hour

Silver
Chart courtesy of tradingview.com

Corrective structures are tricky as I always repeat it as a mantra, but it really has such a nature as it reflects the uncertainty in the market mixed with attempts of different market forces to break out of the current status quo. This creates sharp zigzags and false breakouts as we see it on the silver chart above. Continue reading "Gold & Silver: Santa Claus Rally Postponed" →

Weekly Futures Recap With Mike Seery

Posted on by Mike Seery

Silver Futures

Silver futures in the March contract is currently trading at 17.23 an ounce in a tranquil Friday afternoon in New York as the holiday markets are upon us as that generally lowers the volatility. I'm keeping a close eye on a possible bullish position as silver prices have been stuck in a very tight 6-week consolidation. If prices break the December 4th high of 17.41, I will be recommending a bullish position as I think the commodity markets in 2020 will experience significant rallies to the upside.

At the current time, silver is trading right at its 20-day but still below its 100-day moving average, which stands around the 17.59 level as I think we will probably go sideways for the rest of this month. However, I do expect the volatility to increase substantially in January.

I do not have any precious metal recommendations, but I do believe that platinum and palladium are still bullish and will head higher. I think silver will join the party eventually, so keep a close eye on this market as we could be involved soon as the risk/reward is in your favor due to the excellent chart structure.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

S&P 500 Futures

The S&P 500 in the March contract is continuing its bullish momentum ending the week on a positive note up another 15 points at 3227 after settling last Friday in Chicago at 3175 up over 50 points for the week and hitting another all-time high. This gravy train continues, and I see absolutely no reason to be short this market. Continue reading "Weekly Futures Recap With Mike Seery" →

Protect Your Portfolio Gains In A Euphoric Market

Posted on by The INO.com Team

Impeachment proceedings, U.S.-China trade war, Federal Reserve actions, etc., dominate the headlines and move markets in lock-step. The broader indices are at all-time highs and continue to set new high after new high despite the aforementioned variables. The markets have been on a steady rise for months without much resistance, and overall volatility remains low, indicating that market participants have become overly confident and complacent. The S&P 500 has had a banner year in 2019, posting a year-to-date return of over 25% through mid-December. A “blow-off” rally may be underway at this market juncture, and locking-in portfolio gains while mitigating risk is prudent. An options-based portfolio can offer a superior method to constantly locking-in gains while mitigating risk in these frothy market conditions. Over the previous 15 months through the bear market of Q4 2018 and the bull market of 2019, an options-based portfolio has returned 11.6% compared to the S&P 500 return of 8.7%. These returns have been accomplished with an 87% win rate while having the flexibility to hold ~50% of my portfolio in cash. An options portfolio enables optimal risk mitigation and realization of profits on a continual basis, especially important during market euphoria conditions.

Protecting Market Gains

An options-based approach is much like an insurance company where you sell insurance policies and collect premium income at a level that maximizes a statistical edge to your benefit. This strategy mitigates risk and circumvents drastic market moves. Selling options and collecting premium income in a high-probability manner generates consistent income for steady portfolio appreciation in both bear and bull market conditions. This is all done without predicting which way the market will move. Primarily sticking with dividend-paying large-cap stocks across a diversity of tickers that are liquid in the options market is a great way to generate superior returns with less volatility over the long-term.

Over the past ~15 months, 349 trades have been made with a win rate of 87% and a premium capture of 58% across 70 different tickers. When stacked up against the S&P 500, the options strategy generated a return of 11.6% compared to the S&P 500 index which returned 8.7% over the same period. Options are a bet on where stocks won’t go, not where they will go, where high probability options trading thrives in both bear and bull markets (Figures 1 and 2). Continue reading "Protect Your Portfolio Gains In A Euphoric Market" →