Daily Newsletter – OPEC Pulls a Rabbit


Markets received a shot in the arm last afternoon after OPEC announced a production cut deal. Per Reuters:


“OPEC agreed on Wednesday modest oil output cuts in the first such deal since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices… He and other ministers said the Organization of the Petroleum Exporting Countries would reduce output to a range of 32.5-33.0 million barrels per day. OPEC estimates its current output at 33.24 million bpd.”



On the heels of the announcement, crude oil futures spiked $2.5 to 47 handle, which is precisely the top of the LT descending trendline. Whether we run out of steam now remains to be seen but a break above would point to a squeeze to 50 very quickly. Dips back to broken ST trendline at 46 is a good tactical buy.


US equity markets were also boosted by the positive development in oil, with SPX up another 11pts to 2171. SPY is now edging closer to broken triangle wedge which should see formidable resistance but improving technical picture such as bullish MACD crossover could propel further gains above the wedge.



As shown above, the last 2 times we had a sustained bullish crossover in MACD was the precursor to multi-week rally. This enhances the chance we break out of the trading range to the upside. Earning season likely would be the next major catalyst.


Looking at energy sector, XLE was expectedly the best performer, up 4% but similar to crude oil, XLE hit the top of trading range and needs to prove itself by breaking above with conviction.

In our portfolio, despite rotating to other outperforming sectors, we continue to long WMB and OKE as they continue to show relative strength to rest of sector. For the former, since breaking above bullish channel WMB has continued to grind higher, and 200WMA would be the next target.


Day Ahead – Events and Economic Data


Time Event / Data
8:30am GDP, Jobless Claims
10am Pending Home Sales




Quantitative Strategy – Automated Portfolio Update


Equities Short-Term Long Only      
0.39% 1.67% 47.02%
    Short Only      
      0.31% 1.52% 33.56%
      0.35% 1.57% 41.74%
  Medium-Term Long Only      
      0.46% 1.47% 21.14%
ETF Short-Term Long Only      
      0.01% 4.75% 30.94%
    Short Only      
      0% 3.59% 8.32%
      0.01% 4.32% 29.72%
  Medium-Term Long Only      
      0.31% 3.47% 25.76%
Futures Short-Term Long/Short      
      0.05% 2.78% 6.14%
FX Short-Term Long/Short      
      0% 3.18% 15.11%
SPX Benchmark Index        
      0.53% 0.02% 6.23%

Portfolio Commentary

As September is drawing to an end, just a quick recap of the performance MTD, our portfolios have performed healthily across the board despite volatility in broader markets Both our long and short tactical portfolios were green on the month despite SPX being flat, as our signals were able to pick the outperformers and underperformers. ETF portfolio is the top performer, driven mainly from our strategy’s ability to successfully swing trade GDX and GDXJ with great timing.


Currently our short-term long portfolio is overweight select financial names , and on the other hand, we are in general short utilities in our short portfolio. Post-OPEC, our signal recommends shorting COP and APA which turn overbought and may pullback in the short-term. As mentioned in our market commentary, while oil and energy sector had a great boost today, they remain under their respective LT descending trendline / trading range.




Chart in Focus

SIG – Short-Term Long

Target: 78.55

Entry Point(s): 74.9

Comments: We were bearish on this stock since plunging under 80, but turned ST bullish after technicals are improving and formation of 3 drive to bottom bullish pattern




COP – Short-Term Short

Target: 40

Entry Point(s): 42.18

Comments: Long-term down trend remains to be broken despite today’s exuberant move following the OPEC deal. Signal suggests going against the emotion and be bearish until trend is broken.








Day Trading Charts & Parameters



Dow 30

Support: 18040                                                                                                                   Resistance:18388


S&P 500

Support: 2133, 2143                                                                                                                                       Resistance:2170



NDX 100

Support: 4807,4840                                                                                                                          Resistance:4890, 4920

Comment: Back up above breakout line, now looks to test recent highs.


Crude Oil

Support: 46                                                                                                                                                     Resistance:47





Support: 1307-1315                                                                                                                                       Resistance: 1343


10-Yr Treasury Note

Support: 131.1                                                                                                      Resistance: 132.15






Nikkei 225

Support: 16150                                                                                                                   Resistance: 16745, 16800



Currency Pairs


Support: 99, 100

Resistance: 102.25



Support: 1.1150

Resistance: 1.1254





Support: 1.2600

Resistance: 1.2700,1.2750




Support: 0.7611, 0.7660

Resistance: 0.77

Comment: Threatening to break bullish trendline at the moment



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