Morning Update

Good Morning Friends.

The Fed and the EU Central Bank are talking a LOT this week.  So be careful how you trade.  Yesterday’s slight rally seems to encourage call selling but not many long puts or long calls.  So directionally there is a significant lack of conviction.  It’s a traders market, ie investors do not have a long enough conviction to set up plays.  

A number of energy stocks are breaking out of basing action, look at NOV (National Oil Varco) as an example.  Many oil names are looking like they’re in a coiling (pendent) form and ready to likely move to the upside.  However, there is SO much premium on the long call side make sure if you are looking to trade anything below $50 you consider buying some stock in coordination with a long call or credit put spread position to take full advantage of an upside move without losing your move to IV crush.

We will discuss later which banks are likely to do well in this new high-interest regime, and NO not all banks benefit from higher rates, it depends on which aspect of capital markets the bank is set up to take advantage of now that the fed is not going to be buying back bonds like they had been.  A bank that will likely do very well is American Express because it is a lean bank wrapped in a credit card business which has remained profitable.

Commodities are still to be watched.  Gold and Gold miners are still looking good, through GDX opened down today it might just be a good entry over all.

Corn has been a significant outperformer and nothing relating to food supply suggests that will stop.

Morning Update – April 19, 2022

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