Daily Archives: May 15, 2017

Tax Reform and the ‘Repatriation’ Trade

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The following is the opening segment of the May 14th edition of Notes From the Rabbit Hole

Since the Trump victory we have heard all about the coming fiscal policies that would replace the non-stop and brilliantly evil* monetary policies employed by the Fed since the 2008 market crash. These fiscal policies range from the hair-brained (rust belt factory job repatriation) to the silly (building a border wall in lieu of modernizing security-focused information and surveillance technologies) to the arduous (fixing the Healthcare system) to the sound (well-targeted tax cuts). We’ll get tax cuts, but how well targeted they’ll turn out to be will be debated endlessly and I for one don’t think the trend of the rich getting hyper richer and the poor getting poorer is going to reverse any time soon. For reference, see this post at Biiwii. (more…)

Another Marginal New All Time High

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This morning we finally saw the ATH retest on SPX that I was looking for on Thursday and Friday last week, and that delivered a(nother) very marginal new ATH that sets a possible daily RSI 5 sell signal brewing. This is a possible nested double tops setup on SPX that I’m watching with great interest. If this is a top setup here however, I wouldn’t expect to see much downside today and the 60min charts may still need another ATH retest to set up negative divergence there. SPX daily chart:

170515 SPX Daily

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Energy Bears Fight Back

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As I am typing this, oil is still up 2% on the front month, but it’s a far cry from this morning, when it was up almost twice that much. I took some nasty losses in shorts such as XOP and DBC, as well as some individual energy positions, and with hindsight it would have been better to have had no stop prices at all. I am pleased, however, that I didn’t sell a single share of my ERY long, and in fact I bought more shares, nearly doubling my position, early today at good prices. I’ve got a stop loss price of 11.50 (see tint), and the open price was the lowest we got today. It’s been fighting back every since, God bless it.

0514-ery

Extension Brings Expansion

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Since no one wants natural market forces to work these days, OPEC announced the extension of their already-in-place production cut. The response of crude oil has been steady all night, with prices ascending strongly, up over 3.5% as of this moment. To give this move some context, here’s the daily futures chart. The market is up about 10% since we bottomed earlier this month, but the multi-month trend still remains down.

0515-cl

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