Markets have shaken off yesterday’s weakness, as everyone is anxiously awaiting the FOMC decision that will be announced at 2:00 today. After gapping higher on headlines that somewhat reduce fear of a Cypress bank run, the S&P 500 has traded in a very narrow intraday range. At present levels, The Russell 2000 is leading markets higher, up 0.6%, while the other major indexes are each about 0.5% higher. Metals are somewhat flat ahead of the announcement, while bonds are drifting lower, currently off 0.6% for the day.
CHART OF THE DAY
Murphy Oil Corp (MUR) – The oil and gas exploration company has been strong as of late, up about 40% since bottoming last June. The shares recently spiked higher near their 52-week high, and have since consolidated sideways. Now looks to be an opportune time to enter a long position.
Sentiment toward MUR is growing bearish, as the current Schaeffer’s Open Interest Put/Call Ratio (SOIR) is in the 93rd percentile of all readings taken over the past 52 weeks, and indicating near-extreme bearishness. An unwinding of these bearish bets could act as a tailwind toward the stock going forward. I like an entry here at the 50-day moving average, and would use a close below the 60 level as a sign to exit the position. I would initially target a move to 65, with 75 as a stretch target.
WHAT I’M EXPECTING
There’s no telling what will be said on the FOMC release, so my directional exposure is very light ahead of it. I have been adding a good amount of volatility as of late, as I’m expecting the results of this meeting and continued uncertainty out of the Eurozone to cause some big market moves in the near future.