The Trader Daily

 | Jun 13, 2014 | 7:30 AM EDT  | Comments
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Stock quotes in this article:

rig

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esv

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hero

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gm

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fcx

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msft

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intc

I know most of us tend to focus on the equity markets, but that's not where the bulk of Thursday's action was. While most of us were navigating the unexpected jump in equity volatility, the real gunslingers were bidding WTI Light Crude Futures through the roof. The front month crude contract soared from $104.50 to nearly $107 during Thursday's Globex session. Suffice it to say this action put a strong bid under shares of both energy and solar stocks.

Away from the crude pit, demand also surged in 30-Yr Treasuries, front month gold, silver and yen futures contracts.

On the equity side of things, I should probably mention that Intel (INTC) increased its second-quarter and full-year guidance after the close on Thursday. The company increased its estimate revenue range from $12.5 billion-$13.5 billion to $13.4 billion-$14 billion. This bump in guidance represents a roughly 5% increase. Hardly earth-shattering numbers. Nonetheless, the report was good for an after-hours jump of 5.5% in shares of INTC, and close to 1% in shares of Microsoft (MSFT).

Did consumers ditch their old Windows XP machines and trade up to a new machine with Windows 7 or 8? I haven't a clue. What I do know is that the $29-$29.27 area represents resistance on INTC going back to early 2004. Put another way, proceed with caution if you feel the need to chase shares at the $29.50 after-hours price.

Moving on to Friday's SPY auction, I expect the session's tone to be determined by which side of $193.60-$194.03 range the ETF is trading. Keeping in mind that all trading between those two levels represents no-man's land, I'd expect a sustained trade above $194.03 to bring buyers rushing back into the market. Their upside targets would be $194.55 and $195.20.

The flip side of the above scenario would be a break beneath $193.60. All trading beneath that level keeps the pressure on dip buyers, and encourages day timeframe traders to sell the SPY down toward $192.80, $192.55 and $192.

 

SPY 5-Min Volume Profile
Source: eSignal

 

Additional Notes:

  1. By closing beneath the May 28 $33.83 swing low, and the 50-day simple moving average, Freeport-McMoran (FCX) triggered our stop at Thursday's close. I sold the stock into the closing print.
  2. General Motors (GM) was hit with the rest of the market on Thursday, but the weakness provided an opportunity to buy back the $36.50 strike weekly calls set to expire on Friday. While I highly doubt the stock will bounce back anywhere near $36.50 during Friday's session (when our weekly calls would have expired), I still opted to buy back the calls I sold short back on June 4 (against the long equity position) for a couple pennies. I remain bullish on the stock and am comfortable holding the stock long.
  3. Along with all the shallow and deep-water drillers, Hercules Offshore (HERO) caught a strong bid on Thursday. The stock still needs to make a new swing high above $4.89, but as discussed in the June 11 Trader Daily, I like the looks of the multi-month trend line break and believe the stock has a strong shot at moving higher. Two additional names I like in the offshore space are Transocean (RIG) and Ensco (ESV). But between the two, ESV is a superior company with a younger offshore fleet and more reliable dividend (for those looking beyond the next few weeks). 

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS

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