I've been studying late at night for my CMT test this Friday, and I was reminded by the FSLR chart how bullish the ascending triangle pattern can be. And, with that, I decided to sell my FSLR put (singular, just one) this morning at a loss. Congrats, Beanie! This is your day in the sun (literally).
The GDP came in at (gasp.......) a positive number, which I guess means, based on the current data, that we're not (and maybe won't be.........who knows........) in a recession. The market's reaction was positive, but hardly a blow-out. I guess everyone is on pins and needles for 2:15 EST when the Fed announces.
Now, here, from Slope HQ, is a brief update from our intrepid energy analyst......
Today could be a pivotal day for energy stocks and the whole energy/ materials
trade that has dominated the markets YTD. No, its not because of the DOE weekly
inventory report due out at 10:30 EDT. Its not because of earnings reports by
major oil companies (most of which have beat by a wide margin), nor gas and
heating oil futures expiration at session end. Rather, today could be a day
where industry specific fundamentals dont matter. The reason is that equity
markets may decide that a floor for the US dollar has been set if the Fed truly
makes one final nominal cut in rates and is then done. This view has already
been firmly reflected in the price action of gold, and even more so in the price
of gold equities, which have been hammered over the last 30 days. Oil stocks,
however, have not corrected and are sitting just below mostly all-time highs.
The charts look extended. Even the commodity looks like it should pull-back to
the $105 - $110 per barrel range. If this happens, the sector could correct 10%.
Recall that OIH was below $165 just 40 days ago. The point is that the threat of
sector rotation over the next several days is real and bold bets on the long
side may not be warranted. The threat is magnified by the fact that today is the
end of hedge fund performance reporting for April when the long energy/materials
trade was a huge contributor to monthly performance. If SPY and IWM break-out
today after the Fed decision at 2:15, it will likely be at the expense of OIH
and XLB. We shall see.
