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Commodities and Transportation paint PictureOur ongoing efforts to dissect these markets and to help educated and inform traders has led us on an exploration path into the general market activities of two leading market indicators; Commodity prices and Transportation Prices. These two core elements of any regional or global economy are usually about 3~6 months ahead of the general markets. When viewing the Transportation Index, remember that transportation is key to any growing economy and a healthy economy. When an economy is doing well, the transportation sector will be busy shipping and delivering consumer product and staples as well as manufacturing equipment and supplies. When viewing the Commodity Index, remember the Supply and Demand equation where greater demand for commodities needed to manufacture, create, deliver or sell a product will drive prices higher as supply remains relatively constant, prices will increase. Therefore, the theory of today’s research post is “are Transportation and Commodity prices telling us anything important about the future stock market valuations?”. Let’s get into the research. First, the NASDAQ Transportation Index is painting a very clear picture that the upside price move starting near the end of 2016 drove prices well above historical normal ranges. Even today, we are well above historical ranges originating from the lows in 1998 and including the range expansion from the highs of 2007 to the lows of 2009. Given the premise that the Transportation Index would be highlighting increased economic activities across the planet and particularly those of more mature economies, one should expect that global trade/economic activity should be near all-time highs. What we would expect to find to help confirm our analysis is the price levels of general commodities would be increased to match the renewed optimism we believe is growing in the global markets. Obviously, if the global economies are doing well and trade/sales are increasing, then we would expect core commodity levels to increase as demand stays strong which we have seen this happen time and time again during economic cycles. GLD SLV GDX JNUG NUGT SIL GDXJ IYT XTN TPOR
AMEX:GLDShort
by TheTechnicalTraders
1
The Most Important Stock in U.S. Equity Markets - BoeingThe market's are being influenced by a single stock. How? Well there are linkages and arbitrage opportunities between the big Indices --> SPY, DIA, QQQ What does this mean? This means that if you can make the Dow go up, you can make the S&P go up. If you can make the S&P go up, you can make the Q's go up and vice versa. Can you give me an example? Sure, the fact that there are high frequency shops that capitalize on this is enough for me, but I'll do better; How about the fact that you never see a day where the S&P is up 1% and the QQQ or Dow is down 1%? Next: Structure of how the Dow is priced. It's different than the S&P and QQQ, these are both market-cap weighted. DIA is Price weighted. Boeing is a monstrosity inside of the Dow. It's a $425 stock. The next biggest is UNH @$267, MMM @$209, GS @$196 It's all about Boeing. Why Boeing? (I have to give credit to DataTrek for coming up with this research and all of the tremendous data they come out with:) - Boeing is up 31% YTD and 45% from it's lows. It's low in December was 58 days ago. 45% in 58 Days - Boeing is 11% of the Dow - Boeing is 2.4x more influential than AAPL and 3.9x that of MSFT, AMZN and GOOG aren't even close > Point: Move Boeing and you can move the entire marketplace - Boeing's 10.9% weight has contributed 776 points to the Dow in 2019 - That contribution is more than the next 4 names combined - GS (225 points), IBM (177 points), UTX (157 points), HD (133 points) = 692 points - These 5 names are responsible for 56% of the Dow's gains YTD. > Point: Boeing is directly responsible for 30% of the Dow's gains YTD. > Bigger Point: BA is the most influential stock in the marketplace. If you can move the Dow you can move the S&P's. SPY is up 8% YTD. It's up 19.11% from it's low on Dec 24th @ $234.34 + $44.8 (in 58 days) Why does this concern me? Well there's net outflows in the SPY YTD. I think smart money is potentially selling into this move and covering it up by driving order flow into one stock. ETF Fund Flows; www.etf.com My max upside on Boeing is $454. Have a wonderful weekend everyone and best of luck to ya next week gentlemen - RH
NYSE:BA
by RHTrading
7
TRADE IDEA OF THE WEEK IN CH ROBINSON (CHRW)Now this week's new Trade Idea of The Week is in CH ROBINSON (CHRW). We decided to enter a bullish position in one of our watchlist stocks, CH ROBINSON. We entered this trade on the long side at $92.94 and we have already made some gains today. This is a great setup that we loved to play called a squeeze. This is where the price consolidates and then starts to move with momentum out of the consolidation. This type of setup can produce some of the best explosive moves. Here is a list of reasons why we like this trade: The overall market is looking strong in the short term The transportation sector is looking great right now (you can see this sector's chart on our Sector Watch) The price is moving higher out of a squeeze The price has moved above the 21 period moving average with momentum We are hoping that all of these reasons provide a profitable setup for us to swing trade the next coming days!
NASDAQ:CHRWLong
by StrengthTrading
1