The big mover today was oil, which ended trading at a 2017 low. The weekly U.S. oil inventory published by the Department of Energy showed an 8.2 million increase in the week ended March 3. The total crude stock tallied 528.4 million barrels, a record. Since reaching a low of 468.2 million barrels in October, the inventory has risen by nearly 13 percent in about two-and-a-half months. As oil prices have recovered into the $50 range, U.S. oil production has risen to a one-year high.  

For the time being, OPEC and non-OPEC countries appear to be abiding by their production-curb agreement, so another price collapse into the $30s or even $20s doesn’t look likely at this point. Moreover, today’s inventory data shows drawdown of refined petroleum products, such as gasoline, fell, indicating solid demand in the end-use market.  

The texture of the market has looked weak in recent days. The QCHA, an un-weighted average of the returns of all stocks listed on the New York Stock Exchange, has underperformed the S&P 500’s daily return in five of the six trading days so far in March (including today).  

While the S&P 500 is a widely followed benchmark for the U.S. stock market, the QCHA provides a wider view of the overall U.S. stock market. When it underperforms the S&P 500, it’s typically a sign of underlying weakness.

We are betting against the market via two open put options against the SPDR S&P 500 ETF (SPY).

We recommended the SPDR S&P 500 (SPY) 235 put option last week. It looks like we were one day too early in the recommendation, but there’s a very good chance that this trade will work out profitably.  

We also have open the SPY June 220 put option. Barring quite a large decline, the probability of closing this trade out at a gain is low given how out of the money it currently is. However, market weakness would enable us to close out the option at a better price. 
 
Our dollar indicator surprisingly became neutral today, and we recommended selling to close the PowerShares DB US Dollar Index Bullish Fund (UUP) June 25 call. We could reinitiate another trade in the dollar ETF if warranted by our indicator. This trade was a 19.5 percent winner for us after a holding period of 41 days.
 

Besides the options, we currently recommend the following stocks: NovaGold (NG), Gabriel Resources (GBRRF), Schlumberger (SLB) and Trilogy Metals (TMQ).