It is understandable why people would be long Netflix going into earnings. (You can press Ctrl-E in SlopeCharts to see all historical earnings events). After all, NFLX reliably vaults higher every time they announce. This trend continued until……….it didn’t. As I said earlier, give me this same result with Amazon in 10 days, and this goose is cooked.
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The semiconductor sector has been an important bulwark in the strength of tech stocks. Looking at the SOX, it’s look to me like it is fraying around the edges. There hasn’t been a negative crossover yet, but it’s getting close.
I would first like to point out that the title of this post isn’t “Mind the Gap”. And why is that? Because cliched post titles turn my stomach. It’s the most obvious, tiresome, overused title whenever a post like this comes along. And I’ll be caught DEAD before you see me title something “The Good, The Bad, and the Ugly.” Jesus, man.
Anyway………..the point I wanted to make was that the gap between Friday and Monday bears close scrutiny with respect to the entire tech sector. My view is that today’s UNGODLY boring trading action is just a pause in another leg down. That red line has to be conquered by the bulls in order for them to wrest control back. This trade war business is being vastly underrated in its importance.
Well, I’ll shut up about the oil gap and turn my attention to something even more important: bonds. Treasury bonds have been roaring higher all week, and that’s not great for me, because my entire options portfolio is oriented toward stronger interest rates. (IYR, TLT, XLU). Relief may be at hand, however. The gap at 120.28 is powerful, and my view is that within a month from now, we’ll have pushed below even the lows we saw earlier in May.
I’ve been kind of hung up on the price gap in oil at 73.25. Yesterday, as we had pushed close enough to that number for me to be satisfied, I did a post called “Close Enough“, where I specifically pointed to XOP and wrote “I suspect this one is going to suffer the quickest.” Here is XOP now, with an arrow marking the timestamp of yesterday’s post.
I’ve been watching the gap in the long-term crude oil contract for a long time. The value is at $73.25. We got up to about $73, which is close enough for me.
Well, everything’s green again this morning (except, mercifully, for bonds). Crude oil has been particularly strong for many months now, and I wanted to point out an interesting little tidbit.
If you glance at the ETF symbol USO, which is a very popular instrument for trading crude oil, you will see its price gap is miles and miles away: