DOW Hits 29,000 For First Time

Posted on by The INO.com Team

Hello traders everywhere. Stocks turn mixed after the DOW hit 29,000 for the first time on Friday, ultimately hitting an all-time intra-day high of 29,009.07. Since then, the DOW has turned negative on the day and is down roughly -100 pts or -.3% heading into afternoon trading.

However, the overall weekly picture of the market looks great. The DOW is close to posting a +1% gain sitting at +.95% after hitting 29,000. The S&P 500 will post a gain over one percent with a gain of +1.3%. But they can't compete with the tech-heavy NASDAQ which will post a weekly gain over two percent at +2.1%

The U.S. economy added 145,000 jobs in December. Economists polled by Dow Jones expect the U.S. economy to have added 160,000 jobs in December. Wages also disappointed, growing by just +2.9% on a year-over-year basis. Economists had forecast a gain of +3.1%. December was also the first month since July 2018 that wages grew by less than 3% from the year before. Continue reading "DOW Hits 29,000 For First Time" →

American Airlines Presents A Compelling Buy

Posted on by Noah Kiedrowski

American Airlines (AAL) is a cheap stock by many metrics and currently presents the best value in the airline sector based on valuation. Boeing’s (BA) 737 Max groundings have already been absorbed by the airline and moving forward, American is looking to settle with Boeing. Boeing took a $4.9 billion after-tax charge in Q2 to compensate airlines for the grounding. American is expected to see some cash from that amount once a settlement is reached between the two parties. The company is reducing its debt load, increasing free cash flow, returning value to shareholders, expanding its network while having the youngest fleet among the major airlines. American Airlines is near a 5-year low on the cusp of all the aspects mentioned above coming into the fold for 2020 and beyond. I feel that this stock presents a compelling buying opportunity in the backdrop of a frothy market for long-term investors.

Compelling Value

American presents a compelling value proposition across its enterprise with growth, decreased capital expenditures, youngest fleet of aircraft, debt reduction and increases in free cash flow. In an effort to drive growth, the company is expanding its network to add more gates in profitable hubs for 2019, 2020 and 2021 in Dallas-Fort Worth, Charlotte and Washington D.C., respectively (Figure 1). Early results indicate that hub growth is already creating value. Passenger revenue per available seat mile (PRASM) grew by 3.3% in 2019 from expansion in the Dallas-Forth Worth hub.

American Airlines
Figure 1 – 737 Max grounding and network growth plans already creating value

Starting in 2020, capital expenditures will begin to decrease, resulting in free cash flow increases drastically. At the end of 2019, over $30 billion was invested in the airline, and throughout 2020 and 2021, expenses will dramatically be reduced (Figure 2). These investments have resulted in American having the youngest fleet in the industry with over 50% of its aircraft being less than 10 years old (Figure 3). As expenses decrease, free cash flow will increase substantially to allow American to deleverage their debt. American will increase its free cash flow by $5.5 billion over 2020 and 2021 and over the long-term translating into an $8-$10 billion reduction of debt by 2024 (Figure 4). The company is in a position to increase earnings per share and income, even if the business doesn’t grow. Continue reading "American Airlines Presents A Compelling Buy" →

Pendulum Swing #9: Palladium Vs. Gasoline

Posted on by Aibek Burabayev

2020 has kicked off, and it is time to see where the earlier Pendulum swing #8 has stopped to check if it worked properly. To remind you, we had pitted gasoline against natural gas and below are your bets for that experiment.

Gasoline

Bingo! The majority of you bet it right choosing Natural gas as a winner, and as you can see in the next chart that it has lost 5.42% as gasoline has dropped more than 10% to top the losers’ camp. I want to express my gratitude to those who chose the experiment success option for your trust! So, after the earlier failure in the first half of 2019 (7th swing), the Pendulum experiment is back on a winning track! We got only 2 failures out of 8 experiments now. Let’s push it again and see what happens.

Half Year Futures Performance (Second Half Of 2019)

Gasoline
Chart courtesy of finviz.com

The regular champion and the buzz maker palladium has topped the chart again for the past half of the year as it scored the most with more than 24% gain. On the other side of the scorecard, there is the former champion gasoline, which failed to perform in the earlier contest. Continue reading "Pendulum Swing #9: Palladium Vs. Gasoline" →

Strong U.S. Crude Production Growth In October

Posted on by Robert Boslego

The Energy Information Administration reported that October crude oil production averaged 12.655 million barrels per day (mmbd), up 171,000 b/d from September. In addition, the September estimate was revised 21,000 b/d higher, and so the total gain was 192,000 b/d from the prior estimate.

Texas production reached a new high of 5.273 mmbd, up 53,000 b/d from September. Other gains were 70,000 b/d in North Dakota, 39,000 b/d in Colorado, and 26,000 b/d in Alaska.
The gain in North Dakota established a new high for the state. The Gulf of Mexico remained about 100,000 b/d below the August high.

Plains All American Pipeline LP’s (PAA) Cactus ll pipeline was expected to ship at full capacity, 670,000 b/d, beginning in September. EPIC Midstream’s crude oil pipeline began shipping 400,000 b/d. It is designed to ship 440,000 b/d from the Permian and another 150,000 b/d from the Eagle Ford.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d. It began shipments and is expected to be in full service by the end of the first quarter of 2020.

Crude

The gains from last November have amounted 1.096 million b/d. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For October, that additional gain is about 600,000 b/d. Continue reading "Strong U.S. Crude Production Growth In October" →

Weekly Futures Recap With Mike Seery

Posted on by Mike Seery

Orange Juice Futures

Orange juice futures in the March contract is currently trading at 101.35 after settling last Friday in New York at 100.55 up slightly for the trading week still experiencing very low volatility.

I have been recommending a bullish position from around the 103.30 level, and if you took that trade, continue to place the stop loss under the multi-year low, which stands on December 6th at 97.90 on a closing basis only as the proper exit strategy. Volatility should start to expand to the upside as we enter the volatile winter season for the State of Florida, which could produce a frost that would decimate the orange crop, sending prices sharply higher. However, the 7/10 day weather forecast has ideal weather temperature, as that is why prices have been stuck in the mud. Juice prices are trading above their 20-day but still below their 100-day moving average as the trend is mixed at the current time, but I still do believe that the risk/reward is in your favor to take a bullish position.

I also have a bullish cotton recommendation as we were stopped out of the sugar trade yesterday as I still do believe the agricultural markets are amid bullish trends as I think the downside is limited, so stay long.

TREND: MIXED
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW

Gold Futures

Gold futures in the February contract is sharply higher this Friday afternoon as the United States killed the number 2 leader of the country of Iran sending shockwaves throughout many sectors today. That sent gold up $23 at 1,552 an ounce after settling last Friday at 1,518up about $34 for the trading week. Continue reading "Weekly Futures Recap With Mike Seery" →