Get started

FXI

THE WEEK AHEAD: TWTR EARNINGS; FXI, USO, XOP; VIX, VXX, UVXYEARNINGS: TWTR (66/54) announces earnings on Thursday before market open, so look to put on a play in the waning hours of Wednesday's New York session to take advantage of post-announcement volatility crush. Pictured here is a 16 delta short strangle in the March cycle with -2.88/2.95 delta/theta metrics and break evens wide of the expected move paying 1.10. There are naturally a number of other earnings announcing next week (i.e., DIS, SNAP), but TWTR has the best implied volatility rank/30-day implied metrics to set up for a volatility contraction play. EXCHANGE-TRADED FUNDS ORDERED BY IMPLIED VOLATILITY RANK WITH FIRST MONTH IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS GREATER THAN 10% OF THE STOCK PRICE: FXI (86/30), June USO (72/41), March XLE (72/33), May SMH (68/29), May XOP (56/38), March IBB (56/25), June EWZ (50/30), April GDX (30/31), May GDX (27/27), May BROAD MARKET FUNDS ORDERED BY IMPLIED VOLATILITY RANK WITH THE FIRST MONTH IN WHICH THE AT-THE-MONEY SHORT STRADDLE PAYS GREATER THAN 10% OF THE STOCK PRICE: EEM (62/23), September EFA (60/15), December IWM (54/20), August QQQ (51/22), September SPY (50/18), October FUTURES (EXCLUDING CURRENCIES AND TREASURIES) ORDERED BY IMPLIED VOLATILITY RANK: /CL (64/42) /GC (47/13) /SI (38/21) /ZC (32/20) /NG (29/40) /ZS (18/18) /ZW (7/24) VIX/VIX DERIVATIVES: VIX finished the week at 18.84 with months 1-3 in backwardation; February finished at 18.30, March at 17.80, and April at 17.83. Here, I would add short volatility spreads in either VXX or UVXY, looking to collect one-third the width of the spread in credit (for short call verticals) or not pay more than one-third the width of the spread in debit (for long put verticals) (e.g., the VXX March 20th 16/17 short call vertical, paying .34).
NYSE:TWTR
by NaughtyPines
THE WEEK AHEAD: M EARNINGS; OIH, XOP, ASHR, FXI, IBB PREMIUMI'm personally not doing a ton here with May opex a mere week away and June at 40 days until expiry, which is a smidge short of that 45 day wheel house I like to use for putting on plays. However, there is "stuff" to do if you're so inclined ... . M (71/54) announces earnings on Wednesday before market open, so you'll want to shoot for a fill on whatever you do on Tuesday before market close. Pictured here is a fairly Plain Jane June 21st 20/25 directionally neutral short strangle paying 1.08 at the mid price with break evens of 18.92/26.08 and delta/theta metrics of -2.51/2.84. With May opex options having an implied of 88.9% versus June's 49.6%, we're looking at a fairly big volatility crush post-earnings ... . Macy's has been hammered (it's within 5% of its 52-week low of 22.11), so I could also see the attractiveness of just going purely directional here. The June 21st 22 short put is paying 1.34 with a cost basis of 20.66 in shares if assigned (an 8% discount over current price). It pays an annualized dividend of 1.51 -- a 6.65% yield -- with the last quarterly divvy of .37 being distributed on 4/1 with a record date of 3/15 (i.e., you want to get into shares before 6/15 or so if you want to grab the next dividend). On the exchange-traded fund front, here are the top five ordered by rank -- ASHR (74/32), GDXJ (51/28), FXI (50/23), IBB (46/26), and EFA (44/14), and the top five ordered by 30-day: OIH (37/34), XOP (29/33), ASHR (74/32), EWZ (25/32), and XBI (39/32). If I was going to be picky here, I'd probably wait for more ideal rank/30-day metrics (>50/>35), but ASHR approaches those metrics, even though it falls short of the 30-day 35% mark by a touch. Here are some ASHR setups that might be worth looking at: The June 21st 23/26/28/31 Iron Condor: It's almost so narrow in the body as to approach an iron fly, but it's the only way you'll get one-third the width of the wings out of a defined risk setup without going full-on fly. Paying 1.09 at the mid price (.54 at 50 max), it's got expected move break evens and a delta/theta metric of -3.20/1.27. The June 21st 27 Short Straddle: Paying 2.20 at the mid price (.55 at 25 max), break evens at 24.80/29.20, delta/theta of -5.22/2.70. Alternatively, there is the more liquid FXI (50/23). Although you'll have to put up with a lower 30-day, you can be more surgical since market makers have been kind enough to provide half-dollar strikes even in the monthly 40 days out. The June 21st 37.5/40.5/43.5/46.5 pays 1.01 with break evens wide of the expected move at 39.49/44.51 and delta/theta numbers of -2.69/1.36. The June 21st even-striked 40/44 short strangle pays 1.02 with more forgiving break evens at 38.98/45.02 and delta/theta figures of 2.06/2.58.
NYSE:M
by NaughtyPines
3
China's Large Cap: Ready to test the 10 year Highs?With the U.S. - China trade deal developments ongoing and reportedly staying on positive grounds, the stock markets are globally on the rise in 2019. This is a good time to examine how the heavy Chinese companies are performing. FXI is the index that tracks China's stocks with the largest capitalization. On the monthly (1M) chart we see that since the 2009 crash, it has been recovering on Higher Highs and Higher Lows, effectively constructing a Channel Up on 1M (RSI = 56.535, MACD = 0.600, Highs/Lows = 0.3822). These indicators show that it recently hit a low point and is on the early stages of a new bullish leg. On the chart this is evident by the January 2019 bounce on the inner lower Higher Low trend line (indicated in dash). What is also evident are the 1M Support Zone (28.20 - 28.70) and 1M Resistance Zone (52.90 - 54.00). The 1M Resistance Zone is our immediate target although the 10 year Channel Up suggests that it may break it and peak as high as 61.00. In our opinion it is definitely a time to start looking at China's Large Cap more favorably. We have already warned of this upcoming bullish leg on the Shanghai Composite Index on December 2018: ** If you like our free content follow our profile (www.tradingview.com) to get more daily ideas. ** Comments and likes are greatly appreciated.
AMEX:FXILong
by InvestingScope
Shanghai Slowdown - $FXI $GXC $CHIX $AUDUSD $DXYThe Shanghai Composite snagged for a 4.4 percent drop following more than a 20 percent rally this year. However, the fall may just be the beginning after it we showed that the price was hitting mathematical limitations on top of broadening volume issues. "Funny money leading Shanghai Comp higher. We see how this ends. Weekly z-score 2.23. Intermediate TACVOL score approaching 3. Price moving through 2.5 sigmas. Subscribers got a good picture above global equity volume + #yuan picture last week.#China $FXI $USDCNY." Additionally, China's woes aren't in the rearview. The data continues to be less than optimal, and yesterday's lending data showed a sharp deceleration from January's record nominal level in lending. Expect a 50% Fib. retract in the Shanghai Comp. to 2791. Visit the free Macro Strategist blog for additional charts: themacrostrat.com
SShort
by TheMacroStrategist
The Gold & SPX LinkOn December 26, gold and e-mini futures had a 20-day correlation of -.91 (near inverse), but the 20-day correlation has tightened considerably to .72. Last time we saw this in December 2017 as emerging markets became unhinged, seeing the correlation move from -.78 to .90. It is slightly unnerving because there is virtually no volume in either gold or e-mini futures, and when global equities began to underperform stemming from EM weakness, gold did not rise but declined over 10 percent. Gold has been trading within a tight range after the PBOC announced liquidity measures for the Chinese Lunar New Year, but since the New Year holiday comes to a close, $30B in liquidity was drained via reverse repos and gold began trading higher. Why did gold, equities and the yuan rebound from the depths of December? The aggressive repricing of the yuan by the PBOC. In January, subscribers received "Does China Need a Stronger Yuan?" which outlined that even though China may want to boost secondary industries, such as manufacturing but capital flows are the life blood of China: Yuan strength is important, domestically. The strength of the yuan outright dictates the flow of capital into China and throughout the emerging markets. From 2016 to 2018, China had seen massive foreign inflows into their asset base and it has helped prop the yuan up. However, the abhorrent performance of Chinese and emerging market equities is going to risk significant outflows. This could dramatic impact China's weakening economy and further hit the yuan. What the PBOC has done - masterfully - is strengthen the yuan into the illiquid Chinese New Year while increasing liquidity measures which drove capital into China, and gold benefited. In January, we saw a record flow into of $8.6B emerging market local currency fixed income with $9B into Chinese equities. The problem is whether or not these measures will wake the Chinese economy up. If not, the link between gold, the yuan and equities may continue but to the downside. The yuan is already beginning to weaken against the dollar, and that's weakening gold as expected. China equity bull may get trapped in their consensus position. Check out themacrostrat.com for more!
TVC:GOLD
by TheMacroStrategist
Stronger Yuan Needed to Defend Chinese Corps./FinacialsWe speculate that the recent yuan strength is to defend highly leveraged corporates and stem capital outflows. This is taken from "The Powell Put Pause Revisited" by The Macro Strategist: "We also cannot help but speculate the pressure Powell received from President Trump stems to the negotiations with China. As pointed out here, China needs, may not want, a stronger yuan. In order to have a repeat of the Shanghai Accord, the Fed cannot tighten as China eases due to the currency peg. China's monetary policy would have to reflect the Fed's stance on a relative basis. If we look as Chinese financials (CHIX) and the USDCNY (inverted), we see the PBOC aggressively raising the yuan as Powell coddles market participants." "The highly over-leveraged Chinese corporates and financial institutions cannot take a dramatically weaker yuan. We can't say that Powell gave the PBOC the go ahead, but there is reasons to be that monetary policy concessions vis-a-vis pressure from Trump factors into working out a trade deal. Could China buy more U.S. goods if their credit crisis blows?"
C
by TheMacroStrategist
Expect more downside on FXI Basically, FXI trade in a wide range in the last 10 years, as shown in the chart. Although valuation seems cheap after -20%+ slump in 2018, I suggestion investors take cautions when considering investing in this mainland ETF, as economic slowdown show no sign of abating. the fundamentals of China's growth has stretched far and exhausted because of high debt and capital misallocation. Government has been scrambling to bump up the economy since summer, while the central bank has take a more accommodating monetary policy ,but I consider these measures will take some time to substantiate.
AMEX:FXIShort
by danceeric