Real
SPY Bear /crash indicator DSRE/DSEHThe rate of change in the ratio between the Dow Real Estate index and the Real Estate and Housing Dev index provides a reliable indicator for impending losses in SPY.
Setting a cut off of approximately 3.5 in the ROC (this can be tweaked) is useful.
This industry is primed to suffer more than any other.The chart above shows assorted real estate stocks, they aren't cherry picked and were random (except RAIT Financial), but you can see the trend.
Get the hell out of real estate. Seriously if you have any real estate or RAIT stocks it is a great time to sell. This housing market has gone nuts from the years of 0%. Rental vacancy rates are at a 30 year low and rental prices are through the roof (pardon the pun), with houses that would have a $700 mortgage going for $1200+ with ease. Housing prices are way up too and are around pre-crisis levels.
NO I AM NOT SAYING THIS IS ANOTHER HOUSING BUBBLE. I'm not stupid, c'mon.
Real estate stocks certainly haven't gone crazy in recent years, given residual investor uneasiness about the sector. However, many symbols have made some nice gains since '08 and they are going to get hammered. As you can see on the chart all these symbols are RAITs and real estate and they are sliding already. A rate hike, even if the FOMC says it's only .01%, will be seen as the start of higher interest rates and thus a decrease in home sales. So get some put options on the sector, I'd say go 4-12 months out with strikes 15%+ lower than last price, it'll pay off. Even if Yellen announces no rate hike in Dec., everyone thinks it's coming, and that's all it takes.
The housing market really does need it though, prices are getting a bit too high and rental prices are insane high. Also, don't confuse real estate stocks and bank/financial stocks, banks will benefit from the rate hike (increased lending and profits from interest).
India Could Be the Most Resilient of the BRICSThe BRICS (Brazil, Russia, India, China and South Africa) are highly watched emerging markets because they represented roughly 22 percent of global GDP in 2014. However, the global economic slowdown and increased geopolitical tension has weighed heavy on these markets. Although, India may be the most resilient economy out of the BRICS.
India has felt its share of the slower economic climate, as the Markit manufacturing PMI fell to a seven-month low in September, falling to 51.2 from 52.3. According to Markit, there are signs of sustainable growth but input costs decreased for two months consecutively, which has not happen since the financial crisis. Both manufacturing and industrial output have remained stable. Services PMI has seen improvement since late 2014.
In relation, the Chinese manufacturing PMI clocked in at 47.2 and has been contracting since March while near the worst levels since March 2009.
Due to the slack in the economy and less than expected inflation, the Reserve Bank of India cut the benchmark rate by 50 bps to 6.75 percent. This strengthened the rupee has investors look for it to hinder capital outflow. It also comes as the People's Bank of China (PBoC) devalues the yuan.
USDINR is likely to fall further as I expect the dollar to remain weak following the onslaught of poor economic data. Friday's non-farm payroll print of 146,000 was well below the 201,000 general consensus. To add insult to injury, August's jobs number was revised lower by 50,000 which left mouthpiece economists in bewilderment.
The Fed's inability to act, in regards to an interest rate boost, will leave the dollar on shaky ground. Fed fund futures traders are not pricing in a potential for Fed action until June/July of 2016 - although, I am forecasting a recession by then.
The USDINR is trending within a descending channel with support at 65.28, but the pair will travel to the 50 percent Fib. retracement at 65.15 (with the 72-daily EMA as further support). Secondary target is 64.83.
Resistance can be found at 65.6060, 65.8337 and 66.1374
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DATA VIEW (NOT A FORECAST): REAL SIZE OF FED STIMULUSDespite all the hype raised about fed printing 3.5 trillion USD during times of economic stimulus, the real amout of help to economy is much smaller - it is approximately 1 trillion USD
The rest of "printed" money is held at the Fed or traded on federal funds market by the recipients of the stimulus (key US financial institutions, who received reserve balances for their MBS or Treasuries)
Apparently, recipients are unwilling to lend out the full amount of stimulus to the economy; they prefer to receive fixed guaranteed rate on excess reserves at the Fed (0.25%) or to lend them out at federal funds market (at approximately 0.14%) on overnight basis.
Is it some kind of plot to keep inflation at bey, while making an impression on financial markets? Ask Yellen!=)
Bullish Trade in MOVE: 63 times Usual VolumeMove, Inc. operates an online network of Websites for real estate search, finance, and moving and home enthusiasts in North America. MOVE is currently trading around $12.10 in a 52 week range of $9.91-$18.0036. The company’s stock has been underperforming the market this year with shares falling year to date. Options traders seem to think that this trend will reverseas order flow in XYZ has been decidedly bullish during today’s trading session. Earlier today a trader bought 2000 MOVE July 12.5 Calls for $.90. This is an extremely bullish order and involves this trader laying out $180,000 in total premium. With this order flow and this chart set up I believe XYZ is setting up well for a long.
Unusual Option Activity:
We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.
Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room bit.ly or through Premium Twitter feed with all entries, exits, and unusual options activity tweeted all day long: bit.ly .
Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.
My Trade: I bought 150 MOVE July 12.5 Calls for $1.00
4 Targets: $1.15, $1.30, $1.50 and $1.75
Greeks of this Trade:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long