CTA Trading Desk Morning Report
[7:00am ET] Good morning, Geoff here.
Gold and the broad market continue to trade on emotion.
Gold Sentiment at low (chart courtesy of sentimentrader.com):
While stock sentiment is extremely optimistic.
Did you know that earnings estimates for the S&P 500 are declining as the stock market achieves new highs? Should record high margins contract, P/Es will contract and the market will decline – bulls hope the economy doesn’t slowdown or that may occur.
Did you know that earnings for the gold miners are growing? Estimates for 2013 are actually higher than when GDX peaked in 2011, yet emotions are driving selling.
This is why I think the most profitable trade for 2013 will be in the miners. That is not to say that we have not been long equities. On the contrary, every day for weeks I need to make sure that we are not trading on margin as we hold more stocks than we ever have but eventually money will move out of the broad market into gold and mining shares – be ready for it.
Have a great trading day!
Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.
| Symbol | Name | Last Trade | Change | Related Info |
|---|---|---|---|---|
| ^ATX | ATX | 2,419.70 |  12.19 (0.51%) | Components, Chart, More |
| ^BFX | BEL-20 | 2,548.00 | 25.40 (1.01%) | Components, Chart, More |
| ^FCHI | CAC 40 | 3,727.90 |  7.92 (0.21%) | Components, Chart, More |
| ^GDAXI | DAX | 7,767.77 | 15.32 (0.20%) | Components, Chart, More |
| AEX.AS | AEX General | 346.25 | 1.38 (0.40%) | Components, Chart, More |
| ^OSEAX | OSE All Share | 522.54 | 0.04 (0.01%) | Components, Chart, More |
| ^OMXSPI | Stockholm General | 375.23 | 1.69 (0.45%) | Components, Chart, More |
| ^SSMI | Swiss Market | 7,619.38 | 39.88 (0.53%) | Components, Chart, More |
| ^FTSE | FTSE 100 | 6,398.64 | 19.57 (0.31%) | Components, Chart, More |
| FPXAA.PR | PX Index | 1,003.15 | 2.25 (0.22%) | Chart, More |
| MICEXINDEXCF.ME | MICEX Index | 1,522.69 | 0.00 (0.00%) | Chart, More |
| GD.AT | Athex Composite Share Price Index | 1,044.89 | 6.63 (0.64%) | Chart, More |
http://finviz.com/futures.ashx
http://finviz.com/fut_chart.ashx?p=m5&t=ES
http://finviz.com/fut_chart.ashx?p=m5&t=ZB
http://finviz.com/fut_chart.ashx?p=m5&t=DX
http://finviz.com/fut_chart.ashx?p=m5&t=GC
http://finviz.com/fut_chart.ashx?p=m5&t=SI
http://finviz.com/fut_chart.ashx?p=m5&t=CL
The team will check in during the day, reporting in the Discourse when there is a new entry.
Enjoy your day.
Cara 100 Company research notes from Seeking Alpha
Amazon.com (AMZN)
Feb19: 9:28 AM Amazon (AMZN) announces it’s launching a new entertainment collectibles store which will feature a wide range of film and TV memorabilia. The company appears to be looking to bring merchants over from eBay’s site where the category is quite lively.
BHP Billiton (BHP)
Feb20: 8:19 AM BHP Billiton’s (BHP) new CEO will take over as the miner suffers its worst profit drop in more than a decade, slumping 58% in H1 to $4.2B. Revenues fell 14%. Says it cut $944M in costs over the past half year, but did not outline a broader target for cost cuts. Believes global economy will strengthen over the next 12 months, providing support for commodities demand and pricing. Shares -2.8% premarket.
Boeing (BA)
Feb20: 2:33 AM Boeing’s (BA) 15,500 engineers have accepted the company’s new four-year contract offer, but its 7,400 technical employees have rejected it and authorized the Speea union to call a strike at any time. While the engineers’ contract is in place, Speea negotiators hope to restart talks with Boeing over an agreement for the technical workers.
Exxon Mobil (XOM)
Feb19:10:27 AM Exxon Mobil (XOM +0.2%) says new shale projects in the U.S. and heavy-oil developments in Canada helped add 1.8B barrels to its reserves last year, enough to replace 115% of total output and 174% of its crude and liquids production. XOM returned to having more than half its reserves in liquids instead of gas; at year-end 2012, reserves were 51% liquids and 49% gas, a reversal of 2011.
Freeport-McMoRan (FCX)
Feb19: 10:01 AM Freeport-McMoran (FCX) says it secured $7B in debt financing to help fund its move to diversify into oil and gas via its purchase of Plains Exploration and McMoRan Exploration. FCX says it will draw on the five-year term loan when the takeovers close, likely in Q2, and may use it to fund the cash portion of the deals, among other things.
Gilead (GILD)
Feb19: 9:49 AM Gilead’s (GILD +1.9%) once-daily Sofosbuvir hepatitis C drug met the goals of a fourth Phase III study, this time in patients who had failed prior treatments. With all four trials providing positive results, Gilead is on track to file regulatory applications in the EU and U.S. in Q2.
Joy Global (JOY)
Feb20: 7:41 AM Joy Global (JOY) takeover rumors surface again. This time the supposed buyer is Swedish conglomerate Atlas Copco. Shares +5.5% premarket.
Microsoft (MSFT)
Feb19: 6:17 PM Microsoft (MSFT) roundup: 1) In an interview with Charlie Rose, Bill Gates owns up to Microsoft’s says he’s “not satisfied” with the company’s level of innovation, but praises Windows 8, Surface, Xbox, and Bing. 2) Microsoft says it will integrate Skype with its Lync corporate IM/unified communications platform in June; that could help Lync against Cisco and other rivals. 3) Outlook.com is out of beta, and has 60M active users 7 months after launching. Microsoft claims a third of them came from Gmail.
National Oilwell Varco (NOV)
Feb19: 3:44 PM National Oilwell Varco (NOV +0.2%) receives antitrust approval for its acquisition of Robbins & Myers (RBN +0.7%), clearing the way for the $2.5B deal to close on Wednesday. The companies say they also received a letter from the Canadian antitrust officials stating they didn’t plan to take any action in the matter.
Toyota Motors (TM)
Feb19: 8:56 AM Toyota (TM) says a business venture in Russia is producing its SUVs for distribution throughout the nation. The plant in Vladivostok has the capability to manufacture close to a thousand Land Cruiser Prado SUVs a month, a level which falls in line with the automaker’s ambitious plans in the region.
Vad’s Catch of the Day
Kaimu’s Sound Money
Deron’s Daily ETF Analysis
Whenever we frequently discuss swing trade breakout setups in this technical stock picking newsletter, we typically refer to base breakouts, which is when the stock or ETF breaks out above a lengthy base of consolidation. However, a secondary type of breakout is called the continuation breakout.
Yesterday’s price action in First Trust Dow Jones Internet Index ($FDN) is a clear example of a continuation breakout (short-term consolidation). This is shown on the daily chart of $FDN below:
Although the chart above makes it easy to visually understand the difference between a base breakout and a continuation breakout, let’s briefly discuss the main differences between the two types of momentum trade setups.
A base breakout is the first surge higher that occurs after the stock breaks out above resistance of a lengthy base of price consolidation. The length of the base that precedes the initial breakout is usually at least seven weeks in duration (sometimes substantially longer).
After the stock or ETF initially breaks out above the high of the base and rallies higher, a short-term pause of 5 to 15 days (also known as a “correction by time”) frequently leads to a second breakout. This pause that precedes the second breakout is the basis for the continuation breakout trade setup. A bull flag chart pattern, for example, is a type of continuation breakout.
On the chart above, notice that $FDN paused for three weeks before moving above the high of the continuation base yesterday. Since yesterday’s (February 19) close above the breakout pivot technically triggered a momentum buy signal, we are “officially” buying $FDN in today’s session. Regular subscribers of The Wagner Daily ETF and stock pick newsletter should note our predetermined and exact entry, stop, and target prices for this continuation breakout trade setup. Details of our stock picking service available at http://www.morpheustrading.com.
Point and Figure on Canada
OptionOracle
Harp’s Roadmap
Cara on the Metalminers
Cara on the International Markets
CTA Trading Desk Mid-Day Report
CTA Trading Desk Post-Close Report