Capital Trading Group Daily Newsletter 5-19-2017

Posted by Capital Trading Group on May 19, 2017 8:01:54 AM

Stock investors, at least temporarily have moved past the "noise"

Stock investors, at least temporarily have moved past the "noise" coming out of Washington and Brazil, and have been buying up stocks that were recently hit during the mid-week sell-off.

The markets haven’t seen a significant pullback in several months and many insiders believe U.S. stock valuations have become somewhat expensive, especially if president Trump runs into more political complications and can not get his pro-growth strategies implemented.

The S&P 500’s last correction of -5% or more was all the way back in July of 2016. What’s more, Wednesday’s fall of -1.82% is only the second time in 2017 that the index has lost -1% or more.

Wall Street was happy yesterday to hear
Treasury Secretary, Steve Mnuchin say that the Trump administration did not support the separation of investment and commercial banks. This brought an obvious sigh of relief and a bit more ease amongst the bigger banks. 

There was also some movement on NAFTA as U.S. Trade Representative Robert Lighthizer told lawmakers that he was triggering a 90-day consultation period with Congress and the American public that would allow talks to begin after August 16th.

The U.S. dollar has recovered a bit from its recent tumble, but is nowhere close to the 13-year high it posted back in early-January following the Trump presidential victory.

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Capital Trading Group Daily Newsletter 5-18-2017

Posted by Capital Trading Group on May 18, 2017 8:35:01 AM

Washington rocks Wall Street as volatility surges surrounding president Trump's recent firing of FBI director James Comey and links to Russia.

From what I understand and what's being reported by the media, Trump asked recently-fired FBI Director James Comey to shut down an investigation into Michael Flynn, the former national security advisor that Trump asked to resign in February. The White House maintains that Trump never asked Comey or anyone else to end any investigation.Comey has been invited to testify before the House Oversight Committee next week, though the former FBI Director has yet to officially accept any such invites.

The CBOE’s volatility index, commonly referred to as the VIX, spiked more than 20% yesterday, coming off levels that have been extraordinarily low the last few months. As I mentioned late last week, with very little or limited economic data scheduled for release the media and headline trading crowd would be forced to turn their attention back towards the drama being stirred in Washington. Specifically more talk of stalling tax-reform, stalling infrastructure spending and perhaps mid-term elections bringing even more uncertainty to U.S. leadership, especially if the market starts to believe the Republicans could lose either the House or Senate. In fact the "far left" has gone as far as throwing around the word "impeachment" in regard to the president.

Keep,in mind however this is nothing more extreme than those who to the "far right" were tossing around the same words during the Obama presidency. For what it's worth, the Nasdaq experienced its worst down day yesterday since "Brexit" headlines hit the market last summer. Personally I see it as a temporary speed bump for some of the larger stocks. In other words I don't think people are going to stop buying items from Amazon, stop watching Netflix, or stop searching the web on Google because of drama in Washington. Yes, we could see some large money-mangers and investors look to move money to the sideline while the media runs with the current headlines, but I don't see this as a major game changer.

Energy prices are affordable, housing seems stable and the labor market is much more improved. I am a bit concerned about the slowdown in larger construction projects in parts of the country, and I'm keeping a close eye on the situation. As a longer-term investor, I only have about a 30% allocation in the equity market at this time. I've been banking some profits on the run higher and will stay patient for the moment, thinking I might see better buying opportunities in the days ahead.

From a technical perspective the S&P 500 has currently pulled back by only about -2% from its all-time high. Many of the big money-managers seem to be thinking the market could easily pullback by -5%, simply based on the extent of the recent rally and run to the upside. In fact many believe a -5% to -10% pullback would be good for the longer-term health of the market. A -5% pullback would put the S&P 500 closer to 2280, while a -10% pullback puts it down to around 2160.

As for commodities, the bulls are talking about the U.S. dollar being under fairly heavy pressure as of late and providing a nearby tailwind for the overall commodity asset class. I'm personally a bit hesitant in betting longer-term against the U.S. dollar. In fact the recent pullback has me intrigued and wondering if this isn't signaling a buying opportunity. Today is again a very slow day in regard to economic data being released. The only reports due
out are Weekly Jobless Claims, the Philadelphia Fed Business Outlook Survey and Leading Indicators. The earnings highlights of the day will be Alibaba and WalMart. Stay tuned and pay extremely close attention to the headlines and noise coming out of Washington.

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Capital Trading Group Daily Newsletter 5-17-2017

Posted by Capital Trading Group on May 16, 2017 8:27:35 PM

Economic Divide

We never know what may inspire us to write on a given week. Usually we target some sort of fundamental or technical formation and then extrapolate that data as it portends to our trading and investing view point. This week however we are thinking about grocery stores.  Why?  We aren’t really sure but it seems as if this arena is growing quite frothy. We can't help but look around Chicagoland and see the plethora of brand new hypermarket grocery stores going up. We aren't even talking about the Walmart's, Costco's or Targets. We are talking about Mariano's, Whole Foods, Pete’s Fresh Market and even Aldi's.  Mariano's is taking grocery store shopping and trying to merge general merchandise with a high end feel.  Not sure the masses care too much if a piano is playing while they grab their bread, butter and eggs, but maybe the guy that is getting his steak cooked for him does. Hey we admire the attempt to bring some sort of elitist feel to the general grocery store masses. What we are thinking is that this is all being funded by cheap debt and easy access to capital. This seems like a perfect scenario to describe how this directly leads to a daisy chain of events down the path of over capacity and finally an economic downturn.

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Capital Trading Group Daily Newsletter 5-16-2017

Posted by Capital Trading Group on May 16, 2017 8:43:49 AM

Stock Markets are steady to mixed this morning but only after both S&P 500 and NASDAQ set fresh new all-time record highs yesterday.

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Capital Trading Group Daily Newsletter 5-15-2017

Posted by Capital Trading Group on May 15, 2017 7:57:33 AM

Stocks continue to trade near all-time record highs on extremely low-volatility.

Stocks continue to trade near all-time record highs on extremely low-volatility. Bears argue that with U.S. corporate quarterly earnings mostly behind us and very little fresh economic news scheduled for this week, the media minds will more heavily press the headlines and drama coming out of Washington, the latest of which is President Trump's firing of FBI Director James Comey.

The Senate Intelligence Committee is currently investigating allegations of Russia meddling in last year’s U.S. Presidential election and allegations of collusion between the Trump campaign and Moscow. They had extended an invitation to Comey to testify in a closed session this week, but the former Director declined.

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