Feb 23 Session Profile | /ES S&P 500 E-Mini FuturesDescription:
Things I'm thinking about tonight.
Points of Interest:
Massive gap, trendline break, location between 20 and 50 moving averages on daily chart (), untested POCs.
Technical:
Poor structure (untested POCs) beneath Sunday's overnight. We had a week of balancing and Friday left a poor low.
Fundamental:
Fed really supportive; manufacturing business outlook has risen to highest levels; housing market hot as home building permits rise; debt levels declining; world supply chains at risk due to this virus thing; global yields have generated massive inflows into passive vehicles that are heavily weighted towards a few stocks; insane speculation in the derivatives market (call side especially). We can go on. There is good and bad.
In The News:
Historically, "Epidemics normally have a severe but relatively short-lived impact on economic activity, with the impact on manufacturing and consumption measured in weeks or at worst a few months." (www.reuters.com)
"Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash. Why it matters: Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now." (www.axios.com)
"So add low interest rates to suppressed inflation (temporarily) coupled with slowing worldwide growth, and we get a powerful upward force for stock prices. Our upside target for the S&P 500 Index is now 3600 or higher." (www.cumber.com)
"A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months. While China’s government has cut interest rates, ordered banks to boost lending and loosened criteria for companies to restart operations, many of the nation’s private businesses say they’ve been unable to access the funding they need to meet upcoming deadlines for debt and salary payments. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good." (www.bloomberg.com)
"The White House is reportedly preparing to ask Congress for emergency funds to help the administration fight the outbreak of the coronavirus, which has infected almost 80,000 people around the world and accounted for more than 2,000 deaths." (thehill.com)
"The government of Hubei Province, the epicenter of the coronavirus outbreak, said Thursday it will extend its business shutdown for a third time, this time to March 10, more than a month and a half after the Lunar New Year holiday was slated to end." (asia.nikkei.com)
"'The LEI’s six-month growth rate has returned to positive territory, suggesting that the current economic expansion — at about 2 percent — will continue through early 2020,' Ataman Ozyildirim, senior director of economic research at the Conference Board, said in a statement." (www.axios.com)
How I'm Playing This:
I'm capitalizing on this high IV environment and will look to the call side on strong days, put side on weak days.
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
