Sunday’s news was the Doha meetings could not produce an agreement among oil producers to freeze production. Initially, Saudi Arabia’s stock market did not take the news well and this selling spread across the globe. By the time this morning rolled around here in the US we saw futures rising off their lows. It did not take long for buyers to push US markets higher soon after the close. Oil prices rebounded as well even without a deal in place to freeze production. Volume was much lower on the session down double digits in percentage terms over Friday’s turnover. This continues to be a hated rally and regardless the reason it just wants to keep going. We are not going to fight it.
VIX had an interesting day today. It opened nearly at 15 only to see it reverse lower nearly closing out at the lows. VXX collapsed on the session as XIV climbed towards its 200 day moving average. Complacency is definitely here, but it is not a reason to sell down a heavily long portfolio. There are technical divergences setup, but remember we can remain overbought longer than shorts can stay solvent. Better to have a proper exit strategy in place rather than simply guessing where the market is headed next.
Earnings continue to pour out and tonight we had NFLX and IBM report. NFLX was first up and while it beat its lowered earnings expectations it missed revenues. Add insult to injury the company forecast for subscriber growth was way off analysts’ expectations. The stock is trading lower. IBM is trading lower after it reported earnings. It too beat lowered earnings expectations, but let’s face it the street wasn’t looking for anything huge. ILMN reported a preliminary earnings report and the stock is absolutely getting crushed.
The moral of the story here is to continue to trade within proper risk/reward setups. Proper position sizing and exit strategies are paramount. Hard to trust anything up here without a pullback, but we simply follow our money management rules and our signals. Stay focused on what really matters rather than the “why.”
Some good news we did see IWM recover its 200 day moving average. Volume is non-existent, but in a price only world it does not matter. At some point it might, but we are not going to guess when it will occur.
A good start to the week considering the news flow we saw yesterday. Enjoy your week!
