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Macro

GUOSEN Closing Bell (January. 23)


MARKET

Chinese stocks closed higher today, with the benchmark Shanghai Composite Index ended at 3136.77 points. The A-share market continued to rebound and gained traction for the final week before holidays. Nonferrous metals and military sectors led the gains; while bank sectors led the falls. Combined turnover for both markets was 323 bn yuan, up 2.6% dod.

 

CLOSE

%CHG

VOL (bn yuan)

%YTD

SH Composite

3,136.77

0.44

148.1

1.07

SZ Component

9,976.19

0.71

183.6

-1.97

CSI300

3,364.08

0.27

76.5

1.63

ChiNext

1,887.32

0.35

50.4

-3.81

 

Sector

Top 1

Led by

Top 2

Led by

Upward-leading

Nonferrous metals

600139

Military

300397

Downward-leading

Bank

601009

 

 

 

NEWS

*Energy ministers from OPEC and non-OPEC countries meeting in Vienna yesterday have struck a positive note regarding their agreement to cut oil output as a committee set to monitor compliance with the deal meets for the first time. “I am satisfied, I am optimistic and, as I said, the markets are on their way to rebalance and it’s happening,” Saudi energy minister Khalid al-Falih said. Compliance with the agreement, which calls for cuts to begin this month, had been “fantastic,” he said. Kuwaiti oil minister Essam Al-Marzouq, who chairs the five-member compliance committee, said it would examine how to best monitor compliance and what level of compliance would be acceptable. (Shanghai Daily)

 

 FUND FLOW

 

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This article is from Guosen Securities Co., Ltd. and is being posted with Guosen Securities Co., Ltd.’s permission. The views expressed in this article are solely those of the author and/or Guosen Securities Co., Ltd. and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

European Market Outlook: Trump uncertainly sees risk-off trade, quiet data day ahead


Morning Briefing January 23rd 2017


Monday's data calendar sees plenty of euro area releases, but is very light on US input.

The calendar gets underway at 0800GMT, with the publication of the Spanish services survey and the industrial orders data.

At 0900GMT, Italian industrial orders will be released, with Italian retail sales set to cross the wires at 1000GMT.

Also at 1000GMT, Eurostat will publish the latest EMU government debt and deficit data. 1000/1100 EU government debt.

ECB Executive Board member Peter Praet will deliver a speech at the "European Pillar of Social Rights Conference", organised by European Commission, in Brussels, starting at 1345GMT.

Across the Atlantic, the calendar kicks off at 1330GMT, with the publication of the Canadian Wholesale Trade data.

Back of the Continent, at 1440GMT, the ECB will call for bids on the latest 7-day MRO, before publishing the PSPP bond-buying data at 1450GMT.

The European Commission will publish the latest euro area and EU consumer confidence indicators at 1500GMT.

 

Global Economic Trading Calendar


 

Markets


FOREX: With little data to drive markets today the key driver has been uncertainty surrounding the substance of Trump's policies. The US Dollar was placed on the back foot as President Trump's inauguration was taking place o/n Friday and that theme has continued into Asia to start the new week with the uncertainty surrounding Trump seeing the USD weaken. The US Dollar-Index (DXY) opened at 100.760 and remains heavy, last at 100.310 amid a 100.290-760 range. The Nikkei has remained in negative territory in Asia today which was seen weighing on dollar-yen. The Nikkei was last down 1.06% at 18935.57 having traded 18880-18975 so far. US Treasury yields have taken a hit and were last at 2.430 compared to Friday's close at 2.467. The soft USD theme today has seen dollar-yen trade down to a low so far of Y113.44 amid a Y113.44-114.42 range and the euro-dollar remains bid, having traded up to a high of $1.0750 amid a $1.0691-1.0750 range. Comments from President Trump are likely to be key drivers going forward.

US INDEX FUTURES: US stock index futures are trading lower in risk-off trade as the markets face uncertainty as Donald Trump begins his term, especially with the US/China relationship. Currently the Mar'17 e-mini S&P futures are trading down 6.50 points 2,259.75, the Mar'17 e-mini Nasdaq futures are trading down 15.75 points at 5,042.50, while the Mar'17 e-mini Dow futures are trading down 35.00 points at 19,710.

US TSYS: Cash treasuries remain bid, with CT10 some 2.6bp richer, while 10yr futures are some 6.5-ticks higher than the close, as the early part of Monday's Asian session sees risk off trade. The Nikkei is down 1.10% and e-mini S&P futures are down 5.50-points, while the Dollar/Yen is some 0.62% weaker at 113.92. Cash volumes remain light, with only some ~$700 mln changing hands and 10yr futures some 32k.

JAPAN STOCKS: Japanese stocks have posted decent losses as risk-off trade gripped markets in Asian trade, with the Yen gaining some 1% against the US dollar as uncertainty of Trump's Presidency dominates sentiment. The Nikkei has closed for lunch down 1.06% or 203.34 points at 18,934.57, while the Topix is last down 1.07% or 16.46 points at 1517.00.

GOLD: Spot gold last up $5.80 at $1,216.10 per ounce, in a $1,217.35 to $1,209.65 range so far this morning in Asia, with the market seeing a decent bid on Usd weakness and softer treasury yields. Also, there may be late buying ahead of the CNY holiday that begins this Thursday. Spot gold closed at $1,209.75 per ounce on Friday, after trading in a $1,198.68 to $1.214.88 range. On Tuesday, the precious metal topped out at $1,218.92, the highest level in two months. Traders note that the Comex expiry for the February contract which is also the active spot contract takes place on 26th January. The largest open interest on the radar is the 1200 strike where a combo of puts and calls has an open interest of 1.3 mio oz. This should be enough to keep spot sticky enough in this area until it rolls off.

OIL: WTI crude oil futures for Mar'17 delivery is last up 0.09$ at $53.31 per barrel, after a $53.47 to $53.16 range in Asia today, with the market trading quietly as markets await Trump's first acts of legislation. Over the weekend, Saudi Arabia's oil minister said the OPEC production cuts were going as planned. Friday saw NYMEX February light sweet crude oil futures settled up $1.05 at $52.42 per barrel, after trading $51.39 to $52.90. The Feb contract settled Friday and most players were already trading March, which closed up $1.10 at $53.22 per barrel, in the middle of a $52.13 to $53.67 range. So far in 2017, the front contract has traded in a range of $50.71, seen Jan. 10, to $55.24, seen Jan. 3. Baker Hughes rig count, released Friday, showed a 29-rig increase to 551 rigs for U.S. "oil-only" rigs in the week ending Jan. 20. This compared to 510 rigs a year ago. Current rigs were down 65.8% from the peak rig count of 1,609 rigs seen Oct. 10, 2014.

 

Technical Analysis


BUND: (H17) Bears Shift Focus Back To 159.91-160.80

*RES 4: 163.92 Hourly resistance Jan 17
*RES 3: 163.58 Hourly resistance Jan 18
*RES 2: 163.28 High Jan 20
*RES 1: 162.73 Hourly resistance Jan 20

*PREVIOUS CLOSE: 162.51

*SUP 1: 162.20 Low Jan 20
*SUP 2: 162.04 Low Dec 19
*SUP 3: 160.80 Low Dec 12
*SUP 4: 159.91 Monthly Low Dec 8    

*COMMENTARY: The correction lower from the failed attempt to challenge the 100-DMA resulted in a break of the 162.47 support and a close below the 55-DMA (162.89) Friday. Layers of resistance remain with bulls now needing a close above 163.58 to ease immediate bearish pressure and above 165.26 to confirm a shift in focus to 166.84. Bears now focus their attention on the 159.91-160.80 region with the weekly bull channel base noted at 159.05.

 

EUROSTOXX: Bollinger Bands Hint At Breakout

*RES 4: 3345.20 High Dec 17 2015
*RES 3: 3334.44 2017 High Jan 3 2017
*RES 2: 3326.31 High Jan 9
*RES 1: 3312.14 High Jan 20

*PREVIOUS CLOSE: 3299.44

*SUP 1: 3259.27 Low Dec 22
*SUP 2: 3239.87 Low Dec 16
*SUP 3: 3222.48 100-WMA
*SUP 4: 3206.82 High Dec 12 now support

*COMMENTARY: Oscillation around the 21-DMA (3297.11) continues with bulls now needing a close above 3312.14 to see focus return to the 3326.31-3345.20 region. Bulls continue look for a close above 3345.20 to reconfirm a bullish bias and target 3524.04 Dec 2015 monthly highs. Initial support is now noted at 3274.73 although bears continue to look for a close below 3259.27 to end bullish hopes and shift focus back to 3141.42-3178.88.

 

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MNI subscribers make critical decisions with deeper insight and greater confidence. Pinpoint information and market-moving interviews let them react instantly to market changes and more importantly, anticipate future market moves. MNI reporters are market professionals in the news business. They work like journalists but think like traders. When interviewing Fed officials, our reporters ask the same questions you would ask. They cover the angles you would cover. Write the way you read.

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This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12083




Technical Analysis

GBPUSD Over 400 Pips Above Last Monday's Theresa May Low


The GBPUSD has now recovered all of last Wednesday's losses, with last week's Bullish Engulfing weekly candle suggesting upside these next few weeks.  Significantly, last week's weekly candle appears to have formed a Double Bottom with the October low (if the brief spike lower on Oct 6 isn't considered).  The weekly, daily and 4hr RSI, Stochastics and MACD are rallying, bottomish or consolidating recent gains.  I am flat the GBPUSD and looking to go long intraday in the green zone (on the daily chart), targeting the red zone by mid week.

 

GBPUSD Weekly/Daily/4hr/Hourly

 

Click here for today's technical analysis on Cotton, Silver

 

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This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


12081




Options

The RUT Report


CBOETV - Host Angela Miles discusses upside call calendar spreads with Scott Bauer

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


12080




Options

Disney: Profit From Likely Volatile Earnings Report


Goldman Sachs is telling clients to “straddle” the stock in anticipation of earnings

Walt Disney ’s stock is up about 19% since late October, largely on the strength of the latest Star Wars movies, but Goldman Sachs is telling clients the stock’s ability to secure those gains is not clear as earnings approach.

To position for what is likely to be a volatile earnings report, the bank is telling clients to “straddle” the stock in anticipation the stock surges sharply lower – or higher. According to Goldman’s volatility database, Disney’s (ticker: DIS) options are potentially underpricing the Feb. 7 report. In other words, Goldman thinks Disney’s report could cause the stock to move more than 3% priced by the puts and calls.

With the stock at $108.16, Goldman told clients to consider buying the February $108 put and call that expire Feb. 10. The straddle – that is buying a put and call with the same strike price and expiration – cost $4.36. For the straddle to prove profitable, the stock must move more than the $4.36 cost of the trade.

Investors use straddles to speculate on stocks that they think will make a sharp move in reaction to an event yet are unsure about the direction of the move. The strategy is one of the more expensive approaches investors can take in the options market. Why? It entails buying a put and a call. Most investors prefer selling options to collect premiums, or buying options to express directional views. Despite those facts, Goldman has a good track record recommending the straddle strategy to clients when implied volatility seems to be understating outcomes as is now the case with Disney.

To be sure, Goldman is bullish on Disney, rating the stock Buy. But many of the reasons why the bank is bullish – including movies to be released – are six to 12 months away. Still, Drew Borst, who follows Disney for the bank, sees the stock rising 24% over the next year.

Borst expects Disney will report earnings per share of $1.50 for the first quarter, in-line with consensus estimates. To him, the risk is that Disney’s next quarter’s earnings, expected by analysts to be $1.31 a share, will be 12 cents below the consensus as key earnings drivers are some months away.

Investors who agree with Goldman’s description of Disney’s potential trajectory – that is possible short-term volatility followed by a rally fueled by good news six months out – can consider another trade. To monetize Borst’s longer-term view, consider selling Disney’s April $105 puts to buy the stock on a pullback. With the stock at $107.60, the put was bid at $2.48. If the stock advances, you can keep the put premium. If it declines below the strike price at expiration, you buy the stock. The effective purchase price is $102.52 (strike price less premium received).

The key risk – as is always the case with put sales – is that the stock falls far below the put strike price. But that risk seems less likely given that concerns about ESPN’s subscription rates amid a fast-changing media environment are receding.

Steven M. Sears is a Senior Editor and Columnist with Barron's. He is the author of "The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails." Mr. Sears previously reported for Dow Jones Newswires and The Wall Street Journal. He has reported upon most major modern financial events, including the Asian Contagion, the bursting of the Internet Bubble, the Credit Crisis, and Europe's sovereign debt crisis. He also was part of exchange executive teams that modernized the U.S. options market, and introduced electronic trading. Interact with him on Twitter @sm_sears.

Get investing analysis that moves stocks and markets—Subscribe to Barron’s for just $1 a week.

This article is from Barron's and is being posted with Barron’s permission. The views expressed in this article are solely those of the author and/or Barron's and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


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