Market Action Summary: 8/27/18


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S&P 500 overview

  • Few bearish signals after triangle breakout.
  • Lack of correlations, inter-market warning flags.
  • Sectors bullish as investors rotate into risk-on areas like XLB, EEM.
  • News sentiment bullish because bad news (trade wars) fading, while good news (earnings) not fully priced in.
  • Seasonality may favor complacent drift up, followed by quick drops.
  • @ES likely to give 5-10 point drops, followed by rebounds.

Global picture brighter

  • U.S. dollar (@DX) slid as expected last week.
  • Yuan allowed to gain as Beijing avoids playing hardball with forex.
  • U.S., Mexico sign trade deal, replacing NAFTA.
  • German Ifo strong as trade worries ease.
  • Jerome Powell leaves the punch bowl.
  • Click here for more.

Don’s watch list:

  • American Eagle (AEO) reports Wednesday morning.
  • Tesla Motors (TSLA): What the heck is going on?
  • Chipotle Mexican Grill (CMG): Whacked by Wedbush.
  • Nike (NKE) drifts higher a month before earnings.
  • Pfizer (PFE): Buy the pullback?

Russell’s watch list:

  • Cleveland Cliffs (CLF): Potential bullish continuation after strong earnings. Materials improving.
  • Petrobras (PBR), Facebook (FB), Rio Tinto (RIO), Wynn Resorts (WYNN): Potential put-spread credit opportunities.
  • Match (MTCH) probing new highs w/breakout potential.
  • Caterpillar (CAT), Vale (VALE) breaking 50DMAs.
  • Whiting Petroleum (WLL), Marathon Oil (MRO) have continuation potential if energy climbs.
  • Twitter (TWTR): Will it fill bearish gap from July 27?
  • XPO Logistics (XPO): Long-term secular/cyclical growth name breaking 50DMA.
  • Microsoft (MSFT): October or November 110 calls (max gamma) could make sense.
  • Walt Disney (DIS) holding $112 price zone.
  • Options action:

Charts & Sectors:

  • Strong rotation into global, materials. Safe havens perilous.
  • Chips clawing back. Watch SMH around $109.40.
  • Software blitzing higher as cloud business model flourishes: VEEV, SPLK.
    • CRM reports Wednesday PM, NTNX on Thursday PM
    • PVTL, QLYS on watch list.
  • Small/new-tech on the rise: ZS, PS, ARLO
  • Retailers mostly strong earnings: Watching WMT, TGT for pullbacks.

Upcoming events:

  • Wednesday 8/29: GDP revision, crude-oil inventories.
  • Rest of week: Are we even open?
  • Next week: Payrolls, ISM, few earnings. China news?
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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.