The New Bull Market

[Chronos-Plutus]

Biden will take drugs to debate. Trump will not need drugs to debate him.

There will be a glitch or an edge that Trump must find in the topics: if so; Biden (even with his drugs) will freeze, crack or stumble/crumble.

Realistically: Biden and Harris can't be the leaders of the free world. Sorry.

 

[Chronos-Plutus]

I will take the moral high ground as I did in 2016 and not bet on the election; however this is my recent prediction, with the hot spot in purple: LOCKED-IN THIS IS IT: I will call it comes to Mic, Win and Pen.

 

[ducati916]

Still the Bond market...

Currently just a blip, could settle...

Until the political issues are settled (which really don't matter either way) the markets will likely remain jittery.

Mr flippe-floppe-flye continues to flippe-floppe

jog on
duc

 

[makteb]

Still the Bond market...

View attachment 112429

Currently just a blip, could settle...

View attachment 112426View attachment 112427View attachment 112428

Until the political issues are settled (which really don't matter either way) the markets will likely remain jittery.

Mr flippe-floppe-flye continues to flippe-floppe

View attachment 112425

jog on
duc

Pleasantly enjoy Mr Fly's ability to poetically convey his inner artistic side from the flare and excitement of the market. Some look at mountains, some at abstract objects... for him the music appears in the randomness of numbers the splashing of candles both forming a beautiful picture in his mind. Signs of a true artist that only others at the end of the human spectrum can understand.

Thee who takes small gains takes small losses, thee who takes big gains takes big losses. To the guppies out there, manage your risk appropriately and live to trade another day.

Apologies Duc for the derailment.

 

[aus_trader]

Love the part where he expresses his frustration Mr. duc. Maybe the shorts are losing...

 

[ducati916]

After the 1'st debate:

jog on
duc

 

[ducati916]

By all accounts the 'debate' was a waste of time. No surprises there. Markets seem indifferent.

All sectors having a pretty good day.

We are approaching that support line, which will probably line up with a resistance point in the market (I'll check later). If it does we may have a bit of jumping around.

Banks anticipating good news, which will eventually come. It's not a matter of 'if' just 'when'.

Long way to go to match the late '90's, but it has that feel.

The flippe-floppes continue.

Oil News:

Market Movers

- Dominion Energy (NYSE: D) was upgraded to Overweight by JPMorgan with a $84 price target. The bank said Dominion is “best positioned to highlight ‘green rate of change’ and attract incremental ESG investors.”

- Baker Hughes (NYSE: BKR) announced an order to supply main refrigerant compressors to four “mega trains” for Qatar Petroleum’s North Field expansion project. It is one of Baker Hughes’ largest LNG deals in the past five years.

- Petrobras (NYSE: PBR) said it would spend $6 billion to decommission 18 offshore platforms through 2024.

Tuesday, September 29, 2020

Oil prices slid on Tuesday as traders grew cautious on demand fears and rising coronavirus numbers in the U.S. and Europe. “Sentiment is suffering from the uncertainties related to Covid-19,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA.

Oil stuck at $40. Oil prices have been rangebound at around $40 per barrel for months, and there is little sign that prices will break out anytime soon. “The market is stuck,” Giovanni Staunovo, a commodity analyst at UBS Group AG, told Bloomberg. “For prices to rally, OPEC+ spare capacity needs to drop, and to see that, demand needs to recover further. As long as there’s not a second global lockdown, oil can’t fall too far below $40.”

India cuts refinery runs. Indian refiner Bharat Petroleum Corp. will maintain lower refinery runs due to weak diesel demand, a symptom of a slow recovery in industrial demand.

Libya restarts exports. Libya’s oil production has climbed to 250,000 bpd, up from 90,000 bpd, as the blockade on the country’s oil export terminals is partially lifted. Exports at the eastern ports of Hariga, Brega and Zueitina have resumed, but Es Sider and Ras Lanuf remain offline. JPMorgan and Goldman Sachs estimate that exports could rise to 0.5 mb/d by the end of the year, and potentially rising to 1 mb/d by the end of the first quarter in 2021.

Rosneft criticizes BP’s energy transition. Rosneft (OTCPK:RNFTF), which partners with BP (NYSE: BP) in Russia, criticized the British company’s shift to renewables. “It is an existential threat for supply. It is an existential threat for price volatility... we will have a [supply] crunch, price volatility, and yes higher prices,” Rosneft's Didier Casimiro told the Financial Times Commodities Global Summit.

Colorado drilling setbacks, emissions control, go forward. The Colorado Oil and Gas Conservation Commission voted Monday for 2,000-foot setbacks. A final vote on that rule and many others is expected in early November. The oil and gas industry says the move will devastate drilling in the state by limiting drilling locations. Meanwhile, a separate state agency passed first-in-the-nation rules requiring companies to cut emissions from drill sits, storage takes and pipelines.

Devon Energy merges with WPX. Devon Energy (NYSE: DVN) will acquire WPX Energy (NYSE: WPX) in a $2.6 billion all-stock deal, a move that will make Devon larger than Apache Corp. (NYSE: APA) and Marathon Oil (NYSE: MRO). The share prices of both Devon and WPX jumped on the news, but fell back on Tuesday. The move comes after Chevron (NYSE: CVX) acquired Noble Energy, and may signal more consolidation ahead. Notably, Devon has large acreage on federal lands, which could be at risk if Joe Biden wins the presidency. Acquiring WPX would diversify Devon’s holdings.

Technology will be vital as oil and gas rebounds. The oil and gas industry is going to have to rely heavily on technology to cut costs and increase efficiency. According to industry giant Buurst Inc, there are three key technology trends that will help revive the oil and gas industry. These trends include cloud storage, closing data centers, and cross-platform business partnerships.

Natural gas prices surged on weather. The U.S. west coast is seeing high temperatures, while the east is in a cold spell. Natural gas prices surged to $2.80/MMBtu, but fell back to around $2.50/MMBtu on Tuesday.

Swedish battery maker raising $600 million. Swedish lithium-ion battery manufacturer Northvolt is raising $600 million in equity, with investors including Volkswagen, Goldman Sachs and Spotify founder Daniel Elk. Northvolt aims to capture 25 percent market share in Europe by 2030.

EPA pushes back on California ICE ban. The U.S. EPA is raising legal questions about California’s plans to phase out gasoline and diesel vehicles.

Canada-to-Alaska railway to go forward. U.S. President Donald Trump is set to approve a $22-billion freight railway project that will run between Alberta and Alaska to transport a variety of commodities such as oil, ore, and potash, as well as container goods.

Trump’s offshore drilling ban hits offshore wind. The Trump administration recently blocked offshore oil and gas drilling off the coast of Florida, Georgia, and North and South Carolina. But the restrictions could limit offshore wind as well.

Judge removes BLM acting director. For more than a year, William Perry Pendley has led the Bureau of Land Management as an Acting Director, having not received Senate confirmation. A U.S. judge ruled that his leadership was illegal, a ruling that removes him from the job. The ruling has broader implications. There are now legal questions over whether every BLM rule under his tenure may now be invalidated – decisions that may affect oil and gas leasing.

Shell preparing thousands of job cuts. Royal Dutch Shell (NYSE: RDS.A) is preparing thousands of job cuts as it nears the completion of a major restructuring.

China on track to buy record LNG. China is on track to increase LNG imports by 10 percent this year to a new record high.

China’s car sales increase. In a sign of ongoing recovery, China’s car sales have increased for two consecutive months.

Guyana nears deal with ExxonMobil. Guyana is close to reaching a deal with ExxonMobil (NYSE: XOM) to approve the company’s Payara project.

Trafigura forms renewables unit. Oil trader Trafigura announced plans to invest $2 billion in renewables.

Oil and gas investment to fall, then rebound. The amount of new money going into oil and gas FIDs will drop to around $53 billion, down from 2019’s $190 billion, Rystad Energy projects. FID spending will double next year and exceed pre-pandemic levels already from 2022, the firm said.


jog on
duc

 

[qldfrog]

morning Mr Ducati, hope all is good;
in the absence of your input a poor attempt at a summary of last night
The US session ended positive Russel and NASDAQ out performing but oil went down a bit; so second session in a row with significant positive in the US, a good sign in my opinion.bitcoin down..buying opportunity?
as far as I can see bonds were flat.
roll on

 

[qldfrog]

the difference between Duc and I is that he knows what he is talking about and could even have seen today's fall

 

[aus_trader]

the difference between Duc and I is that he knows what he is talking about and could even have seen today's fall

I really liked duc's "Dr.Fly" captions. They were straight to the point with colorful language which made reading them a delight. And no fluff or padding to fill up articles that usual news writers do, it was jam packed with content from a trader's point of view.

Don't worry you've made a good effort @qldfrog. Thanks.

 

[qldfrog]

Trying to keep info relevant and avoiding my obvious lack of knowledge, i want to share an article i found interesting
https://www.barrons.com/articles/a-60-40-stocks-bond-strategy-no-longer-works-heres-what-to-do-instead-51601653163?siteid=yhoyhoof2

Otherwise, making money in the US with best daily return in a few days today.
Unexpected
Market doing ok with the Trump covid scare...
But oil still going down

 

[ducati916]

We have a news story that probably does have some market moving potential, President Trump and this is what happens:

Let's start with Mr flippe-floppe-flye as he is American in America:

Now Trump has tested negative or at least that is what the newswires are reporting.

So the market obviously reacted and reacted negatively. Now the obvious question is: given the nature of COVID, had no-one priced in the possibility (probability) of Trump in an election season contracting COVID? Boris in the UK was hospitalised with it.

So markets sit currently:

Which looks rotational. This could have looked quite different earlier. The interesting question would have been if it didn't look much different (ie the same sectors showing relative strength/weakness) what is the takeaway? Then the 'Trump' story is just a cover story for a rotation that is already taking place.

A more granular breakdown:

Everything that you would expect to be up is down and vice versa. Given that 1 President is much the same as another, demonstrated multiple times in the past, the Trump story is smoke.

Some macro data:

3 steps forward 1 step back. That is positive. The economy is adapting and moving forward.

Some subjective readings:

Clearly if you sit back for a while and think about the data and comments, there could well be important information contained therein.


Finally:

The open lower: a surprise?

Now this chart updates in real time. Yesterdays close would have left us at the top R 1.64 reading. A pullback was almost inevitable given where we sat. It could have gone higher, but the probabilities were low when we look at overall breadth - we just didn't have the numbers to drive the indices into outlier territory on the indices:

This is the QQQ, but the S&P500 looks essentially the same. With TRIN sitting where it was, consolidation was always on the cards with this type of breadth.

The Trump story (for me) was simply the easiest and most available causation story out there, hence I slept in late for the w/e.

jog on
duc

 

[qldfrog]

nice to see you back.but yes, even my energy sector in the green even with oil fall today.The rotation story was even truer today than before

 

[ducati916]

nice to see you back.but yes, even my energy sector in the green even with oil fall today.The rotation story was even truer today than before

Morning Mr Frog, yes rotation is an economic reality and takes time. It is a process.

Actually a correction to my previous post:

POTUS has tested +'ve for COVID.

Which only underlines the fallacy of attribution of this to a flicker of volatility.


jog on
duc

 

[ducati916]

I like energy, but it has been in the doldrums for quite some time.

Probably more time required before looking more in depth.

Financials however:

Are looking like they have bottomed and are ready to start trending higher.

And Tech:

Ready to rejoin longer term trendline?

jog on
duc

 

[ducati916]

Probably through to the elections conclusion, it will be more important to watch the Bond market than the Stock market. I have dropped the timeframe just to make things easier to see.

Stocks are recovering but will still be prone to quick sell-offs out of the (seeming) blue. Likely any selloffs that we should encounter will be attributed to the news story of the day.

The Bond market however tells the story.

Above is the Bond market VIX. We are still potentially in a rising vol. situation. Because we never tested that trendline, it looks as if it will be tested. If it fails, stock vol. will jump alarmingly and we will be headed lower.

So will the Bond VIX hold?

From early August we can see the run to Treasury paper, which you can track in the VIX chart also. The square box is the turn lower (without touching the trendline in the VIX) above.

What makes this relevant is that Corporate Bonds offer higher yield than Treasury paper, but obviously carry more risk. Treasuries from the 3yr up the curve in the last few days have steepened by about 2-4 basis points and sit where we sat in August and which is 20 basis points higher than April. Translated onto our chart above, this means that the Bond market is pricing the risk as roughly equivalent as in April (where stocks moved higher) which should result in a continued rotation back into riskier Corporates. We can just see the break of the trendline above, which will correlate with the VIX and translate into lower stock vol. and higher prices.

Obviously Corporates benefit greatly from Fed. and Government handouts to those at risk of default, which is certainly playing out in the news currently. Policies, election news and promises will obviously impact markets in the short term. Long term, as history has demonstrated, there is no material difference to the market whoever takes the election.

Unless you are day trading, the best thing you can probably do is not look at the market again until January.

jog on
duc

 

[ducati916]

Not too much to add today:

Market looking good across the majority of sectors.

Bank earnings are on deck next week. Not expecting any outstanding results, nor any disasters.

jog on
duc

 

[ducati916]

Now that the market has closed, there is some interesting data.

Stock VIX is still elevated, even after a bumper day with stocks rising.

Likely because Bond VIX is still elevated.

Yet, the rotation back to Corporates is confirmed.

There is however another narrative developing:

It seems that the Stock VIX has picked up really (really) high short selling.

Is this (again) a function of the Options market and traders buying excessive Calls?

No.

So the above data is correct: there has been today a really large volume of naked short sales.

Does Mr flippe-floppe-flye have any insight?

Err, no, not really.

Something to be cognitive of.


jog on
duc

 

[peter2]

Yes, I noticed the unusual strength in the VIX in the early hours of the US session. It's very unusual to see both the SPY and VIX going up together. The VIX soon reversed but with no strength. I'm assuming this underlying demand for the VIX is due to the pending election.

Whatever the reason I have to respect that investors think something may happen soon.

 

[ducati916]

Yes, I noticed the unusual strength in the VIX in the early hours of the US session. It's very unusual to see both the SPY and VIX going up together. The VIX soon reversed but with no strength. I'm assuming this underlying demand for the VIX is due to the pending election.

Whatever the reason I have to respect that investors think something may happen soon.

Actually, after ruminating over the chart (below) and having a coffee, I'm going to reverse my initial position and say that the Options market and the tremendous reversal in buying Calls, forcing the MM to short stock, probably has quite a bit-to-do with the total short position.

jog on
duc