Hurricane Irma is blasting through the Caribbean, leaving at least eight people dead as authorities warn the number of fatalities is likely to rise.
Markets keep moving through disasters, and with this devastating storm, the energy sector’s rally has become a hot topic among traders.
The big ETF for energy stocks XLE, +0.34% is now up about 5% since Aug. 21, but Instinet’s Frank Cappelleri isn’t convinced this rally can be trusted, as he provides our chart of the day.
“While the current pop is being attributed in part to the hurricane havoc, does the chart look THAT much different now compared to other times this year? Not if it once again fails to make a higher high,” Cappelleri writes.
Unless XLE delivers a higher high, we simply can’t expect any rebounds to turn out better than prior bounces that flopped, he adds. (Chart watchers say you can only have an uptrend in a stock or ETF when each successive peak is above earlier ones.)
Energy stocks are showing improvement, Cappelleri notes, as he also shares the handy rotation graph shown below. Their “next pullback NEEDS to be healthier than what we’ve seen this year though, as each decline has forced the XLE lower every time,” Instinet’s executive director says.
Traders can believe more in the energy ETF once it climbs above its 100-day moving average, suggests another chart watcher, Andrew Thrasher, as he details a few things that he’s looking for:
Here’s what I’m looking for in Energy: To see momentum breakout of its bearish range & price & relative strength to break prior resistance pic.twitter.com/PVUYitBnwk
— Andrew Thrasher, CMT (@AndrewThrasher) September 6, 2017
To be sure, other traders are more upbeat on energy stocks. There may be a lucrative opportunity in U.S. shale producers, MarketWatch’s Thomas Kee says.
The advance for energy stocks has come as the U.S. oil benchmark CLV7, -0.53% jumps to around a one-month high. WTI has been getting a lift from worries about a potential hit to production from Irma, as well as from renewed demand for crude, thanks to Gulf Coast refineries reopening after their Hurricane Harvey-related shutdowns.
Futures for the Dow YMU7, +0.06% , S&P 500 ESU7, +0.10% and Nasdaq-100 NQU7, +0.16% are little changed, after the Dow DJIA, +0.10% , S&P SPX, +0.06% and Nasdaq Composite COMP, +0.00%all gained yesterday.
European stocks SXXP, +0.21% and the euro EURUSD, +0.7720% are in the green as traders track European Central Bank boss Mario Draghi’s news conference, which comes after the ECB made no change to interest rates or its bond buying.
See the Market Snapshot column for the latest action.
It “doesn’t feel like tulip-bulb mania,” but this market is concerning, warns Goldman Sachs boss Lloyd Blankfein.
“Things have been going up for too long,” he said at an event in Germany yesterday, according to a MoneyBeat report.
“When yields on corporate bonds are lower than dividends on stocks? That unnerves me,” Blankfein said.
Goldman alum Gary Cohn — currently President Donald Trump’s top economic adviser — would do a “great job” as Federal Reserve chief, he also said. Though he did note that Cohn doesn’t seem like he “reads a lot of policy papers, let alone writes them.”
Then again, he was speaking before a report that Trump is unlikely to pick Cohn to take over from Janet Yellen.
— NHC Atlantic Ops (@NHC_Atlantic) September 7, 2017
59% of Florida’s properties in hazard zones are without flood insurance coverage as Hurricane Irma bears down, according to an Associated Press report that highlights a steep drop in flood insurance across the state.
“This is a mixed-signal market,” says financial blogger Pretzel Logic in his latest post, adding that “there’s no overarching theme.”
Speaking of cloudy messaging: Markets are hoping for a clear steer from the ECB on whether it’s time to start winding down bond buys.
Follow our ECB live blog:Is a strong euro making Mario Draghi miserable?
The retailer formerly known as Restoration Hardware RH, +43.87% is on track for a big up day after posting better-than-anticipated earnings late yesterday. GoPro GPRO, +16.15% is also set for a jump after its surprisingly upbeat outlook.
FAANG news: Facebook FB, -0.49% has disclosed ad sales totaling $100,000 from Russian accounts, some of which are likely linked to a troll farm in St. Petersburg, and Amazon AMZN, +0.68% is looking for a second headquarters city in North America.
Check out:MarketWatch’s Economic Calendar
On the Fed docket, the Cleveland Fed’s Loretta Mester is due to give a speech around lunchtime, then the New York Fed’s William Dudley and the Kansas City Fed’s Esther George come after the market’s close.
“I gasped when I heard it.” — Rep. Kevin Cramer (R-N.D.) describes his reaction to hearing about the debt-ceiling deal that President Trump made with Democrats, reflecting the concern among rank-and-file Republicans about the fiscal package.
Cramer also said he trusts Trump’s “negotiating ability,” a report from The Hill says.
The late George Michael has a new single out.
Apple and Amazon have jumped into a bidding war for Bond movies.
The U.K. government’s Brexit bill is under attack on all fronts.
NFL says Michael Bennett’s account of a cop’s threat merits serious attention.
Even royals get worried on their first day of school:
— ITV News (@itvnews) September 7, 2017
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