Jeff Bishop’s Weekly Money Multiplier – Macro Risks and the Fed

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By Jeff Bishop – WeeklyMoneyMultiplier.com

The first trading day of Month started in the same fashion as the previous two- stocks pointing higher. In February, the Dow finished 3.7% higher, while the S&P 500 and the Nasdaq rose 3% and 3.4% respectively. This has been the best two-month performance for the Dow since October 2010.

While it was a busy week for stocks:

  • Q4 Earnings Releases
  • Fed’s Powell testimony to the Senate Committee
  • Q4 GDP grew at a 2.6% annual pace, beating estimates of 2.2%
  • U.S. and China are making positive steps towards a trade deal
  • The VIX dipped below 14, closing at 13.57 (the VIX was at 36 on 12/24/18)

I study market volatility, read through economic reports, and follow what the Fed says firmly. I do it because it gives me a big-picture view on market sentiment.

From there, I’m able to put a more detailed plan, using options to trade ETFs and individual stocks. It doesn’t matter if stocks are melting up or down… my money pattern works in all market conditions. If you’d like to know more about it, click here.

It even works when I’m on vacation…

That’s me in front of the Transformers the Ride at Universal Orlando while on a small family vacation. (I mixed in some work while I was in Orlando too. Thanks for everyone who attended the Millionaire Roadmap Mastermind meetup… always great to put the faces and names together.)

(Want to hear about these trades as their happening in real-time and not after-the-fact. You can, all you have to do is watch this.)

I was up $37.9K that day, and on Friday, my UNG calls were up nearly 200%.

Not too shabby, for someone who primarily trades on their iPhone and on the go. It’s no fluke… I have tailored my trading to meet the demands of my busy lifestyle.

Anyways, we’ve entered March madness. While the markets have been grinding higher for two straight months, I’m expecting some headwind. But first, let’s get ready for the upcoming week.

It’s going to be another busy earnings week for retailers like Etsy, Target, and Costco.  Traders will also be swamped with economic data throughout the week.

Table of Contents show

Jump on the Week – Macro Variables and FOMC

There’s a lot going on with the markets in terms of macro variables. Federal Reserve Chair Jerome Powell gave his testimonies to the Senate Banking Committee and Capitol Hill. One thing that Powell noted was the fact that there are:

  • Growing risks like global slowdown
  • Volatile markets
  • Uncertainty surrounding the U.S. – China trade deal

However, Powell also noted the U.S. economy “is in a good place.” Moreover, the Federal Reserve Chair confirmed the central bank would end its balance sheet reduction program this year. He noted the Fed would announce the framework of a plan to end the balance sheet normalization process.

What’s this mean for us though?

Well, we’re watching Treasury rates – more specifically, the 10-year and 2-year Treasury spread.

If the difference between the 10-year Treasury yield and 2-year Treasury yield becomes negative… well, we could see some volatility in the stock markets – potentially causing them to crash.

For now, I’m going to remain patient with market plays – I’m not getting into my full size in any options on market-tracking exchange-traded funds (ETFs) just yet. The market has just been relentless and I’m not going to fight the trend just yet.

U.S. – China Trade Deal Developments

Now, this may be a buy the rumor, sell the news type play. The U.S. and China have made some progress and will be announcing a potential deal later this month. Moreover, the President of the U.S. (POTUS) and North Korean leader Kim Jong Un abruptly ended the nuclear summit… so this could strengthen U.S. and China ties.

Again, this is a wait and see game for me… so I’m going to be patient.

But that doesn’t mean I’m not trading options…

What I’m watching in the Markets…

Now, I already locked in some profits in the United States Natural Gas Fund (UNG).

All while I was waiting in line for the Transformers ride at Universal Orlando…

I locked in half of those profits… and letting the rest ride.

Why’s that? Well, my money pattern is telling to stay in right now… Moreover, UNG closed above the 200-hourly simple moving average (SMA).

Want to Learn More About this Trade?

Click Here to See the Strategy

I’m also keeping a close eye on the Invesco QQQ Trust (QQQ):

This ETF tracks the Nasdaq-100 Index, and it’s had a tough time around these levels before. If you look at the chart above… QQQ traded above the green line (200-daily SMA) 3 times late last year… only to fall back below it.

Now, we’ve got retailers reporting this week – stocks like Target (TGT), Kohl’s (KSS), Urban Outfitters (URBN), Burlington Stores (BURL), and Abercrombie & Fitch (ANF). That said, I’ll also keep an eye on the SPDR S&P Retail ETF (XRT). Traders will be watching what XRT at these levels (the green line in the chart below – the 200-daily SMA):

With the markets strong, we saw the CBOE Volatility Index ($VIX) tick down – seeing a 13 handle.

Moreover, we’re seeing the CBOE VIX of VIX ($VVIX) – this measures the volatility of the VIX – fall below 80…

Well, that begs the question, “Are traders too complacent at these levels?”

Whatever the market does here… we’ll be ready.

That said, let’s look at what’s on the docket for the week of March 4, 2019.

Monday, March 4, 2019

Economic Calendar

  • 10:00 AM EST                 Construction Spending

Earnings Calendar

Earnings Before the Open:

  • No notable earnings

Earnings After the Close

  • Salesforce.com Inc (CRM) implying 7.34% move, historical average move 4.43%.
  • 21Vianet Group (VNET) implying 3.83% move, historical average move 10.62%.

Tuesday, March 5, 2019

Economic Calendar

  • 7:45 AM EST                   ICSC Weekly Retail Sales
  • 8:55 AM EST                   Johnson/Redbook Weekly Sales
  • 9:45 AM EST                   Markit U.S. Services and Composite PMI
  • 10:00 AM EST                 New Home Sales
  • 2:00 PM EST                   Monthly Budget Statement

Earnings Calendar

Earnings Before the Open

  • Ciena Corp. (CIEN) implying 8.65% move, historical average move 11.85%.
  • Kohl’s Corp. (KSS) implying 8.59% move, historical average move 7.66%.
  • Target Corp. (TGT) implying 6.40% move, historical average move 8.47%.

Earnings After the Close

  • Ambarella (AMBA) implying 10.85% move, historical average move 15.45%.
  • Ross Stores (ROST) implying 6.45% move (monthly options expiring on 3/15/2019), historical average move 7.89%.
  • Urban Outfitters Inc. (URBN) implying 9.54% move, historical average move 9.08%.

Wednesday, March 6, 2019

Economic Calendar

  • 7:00 AM EST                   MBA Mortgage Applications Data
  • 8:15 AM EST                   ADP Employment Change in February
  • 8:30 AM EST                   Trade Balance for December
  • 10:30 AM EST                 Weekly DOE Inventory Data
  • 12:00 PM EST                 Fed’s Williams speaks to the Economic Club of New York
  • 12:00 PM EST                 Fed’s Mester participates in moderated discussion
  • 2:00 PM EST                   Fed Beige Book released

Earnings Calendar

Earnings Before the Open

  • Abercrombie & Fitch (ANF) implying 12.57% move, historical average move 18.70%.
  • Dollar Tree Inc. (DLTR) implying 7.42% move, historical average move 9.96%.
  • Thor Industries (THO) implying 9.60% (monthly options expiring 3/15/2019) move, historical average move 10.29%.

Earnings After the Close

  • American Eagle Outfitters (AEO) implying 9.07% move, historical average move 10.11%.
  • TTEC Holdings (TTEC) implying 9.14% move (monthly options expiring 3/15/2019), historical average move 9.60%.

Thursday, March 7, 2019

Economic Calendar

  • 7:30 AM EST                   Challenger job cuts
  • 8:30 AM EST                   Weekly Jobless Claims
  • 8:30 AM EST                   Continuing Claims
  • 8:30 AM EST                   Non-farm Productivity
  • 8:30 AM EST                   Unit Labor Costs
  • 10:30 AM EST                 Weekly EIA Natural Gas Inventory Data
  • 3:00 PM EST                   Consumer Credit

Earnings Calendar

Earnings Before the Open

  • Burlington Stores (BURL) implying 7.42% move, historical average move 8.21%.
  • H&R Block (HRB) implying 9.65% move (monthly options expiring 3/15/2019), historical average move 11.38%.
  • International Game Technology (IGT) implying 12.93% move (monthly options expiring 3/15/2019), historical average move 13.98%.
  • Kroger (KR) implying 7.67% move, historical average move 11.13%.
  • Tech Data (TECD) implying 9.64% move (monthly options expiring 3/15/2019), historical average move 15.34%.

Earnings After the Close

  • American Outdoor Brands Corp. (AOBC) implying 11.79% move, historical average move 18.59%.
  • Costco Wholesale (COST) implying 4% move, historical average move 4.74%.
  • Marvell Technology (MRVL) implying 6.22% move, historical average move 5.59%.
  • Okta Inc. (OKTA) implying 12.49% move (monthly options expiring 3/15/2019).

Other Notable Macro Events

  • The European Central Bank (ECB) announces policy decision at 7:45 AM EST
  • ECB President Draghi press release, 8:30 AM EST

Friday, March 8, 2019

Economic Calendar

  • 8:30 AM EST                   Change in Nonfarm payrolls
  • 8:30 AM EST                   Change in Private Payrolls
  • 8:30 AM EST                   Change in Manufacturing Payrolls
  • 8:30 AM EST                   Unemployment Rate
  • 8:30 AM EST                   Average Hourly Earnings
  • 8:30 AM EST                   Housing Starts
  • 8:30 AM EST                   Building Permits
  • 1:00 PM EST                   Baker Hughes Weekly Rig Count

Earnings Calendar

Earnings Before the Open

  • Navistar (NAV) implying 7.69% move, historical average move 9.30%.

 

Source: WeeklyMoneyMultiplier.com | Original Link

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