Bull Bear Plays 9-25-2017

What I’m Watching



$DO – UBS upgraded from neutral to buy, and raised the price target from $12 to 15
$GM – Deutsche Bank upgraded from hold to buy, and raised the price target from $36 to $51
$NE – UBS upgraded from hold to buy, and raised the price target from $4 to $6
$RIG – UBS upgraded from neutral to buy, and raised the price target from $9 to $15
$CDXC – Ladenburg Thalmann initiated with a buy, and a price target of $7


$ABBV – UBS downgraded from buy to neutral, though increased price target from $79 to $92
$SNAP – JP Morgan reduced the price target from $16 to $14
$CNK – RBC Capital Markets reduced the price target from $43 to $40

*Note, a bearish outlook doesn’t necessarily mean I’m considering a short position, I may be looking for it to bottom out before going long.

What I’m Trading

$ES_F – I remain neutral on this beast. CFTC S&P 500 speculative net positions went from 188K last week, down to 101.3K, a blow to bulls, and a win for bears. However, the above noted CFTC bearish outlook can end up being moot, as in this trap ’em game, you don’t know what’s going to happen with $ES_F, but you should be ready for most set-ups the last 10 years or so have given us; including the changing of directions multiple times throughout the trading day. That’s what I’ve based my algo on.

Did North Korea Cause Volatility Today?

Not entirely! The Kurdish situation in Iraq got very little social media/air time, as North Korea involves Trump. If I were to weight this thing (completely anecdotal), I would say 66% of the volatility was caused by the movement in oil, which was caused by the Kurdish unrest in Iraq vis-à-vis adding more fuel (ahem) to the already flaming Middle East fire, the rest was due to NK.

Here’s my train of thought:

  1. $ES_F has been ultra-boring for weeks, causing many traders to look for more volatile action, as we’ve seen in $CL_F. These traders would rather risk their money on $CL_F, where there is higher reward for their risk, as such we lost some major $ES_F players to $CL_F.
  2. $ES_F was weak in the morning *before* the NK news.
  3. NK news hit main stream at around 8A PST, keeping BTD (buy the dip) bulls, AKA counter-trend bulls, from jumping in at the open of RTH. As things settled around 11:30A PST (right around the same time as $CL_F was starting to have a bit of a pullback from the day’s high), BTDers stepped in and pushed up the price of $ES_F.
  4. This is the *most* important point – everything that happened in today’s trading can also be easily explained merely by looking at the lines in the $ES_F chart below. Take a look at where there was resistance, and where the support line was broken, and you can easily conclude one can trade entirely based on the technical signals of a chart;)


About Raffi Sosikian

Passion for the markets. Bores wife constantly with market talk. Long term value investor. Trader of only one instrument – Spoo (E-mini S&P 500 futures). 20 years experience. Coder. MBA. Now offering private funds/qualified purchasers his $ES_F trading service based solely on performance ($0 management fees). 

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