Before the Bell April 21

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Tickers:  SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX SMH  DIS SPOT CVNA VRM

Before the Bell  is premarket prep for active traders. The note provides detailed stock market technical analysis focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Inspiration 

Everyone needs to be loved; even those who do not deserve it

 

Just because this was inside my fortune cookie last night doesn’t mean it isn’t true.  Opportunities to show your love and compassion present themselves everyday.  Next time you’re in a grocery store parking lot, offer to help a senior citizen unload their groceries or put the cart back in the corral for them. They’ll look at you like you’re Jesus.  You can do this too in your trading life. Reach out to someone who’s just been clowned either by bad fortune or their own stupidity. Your sympathetic ear will make a huge difference both to them and you.

 

Earnings

Companion Video  

The video is a detailed technical review of the indexes and FATMAAN names. All the key trading levels are identified along with commentary and trade plans for each ticker. Trade ideas are also discussed.  Run the video at  1.5x to maximize efficiency without loss of clarity.

Find the Companion Video HERE

 

Macro Data Releases Week of April 18

  • Monday – Housing Market Index; Bullard 4pm
  • Tuesday – Housing Starts; Evans Noon
  • Wednesday – Existing Home Sales; Oil Inventory; 20yr bond auction 1pm; Beige Book
  • Thursday – Jobless Claims; Philly Fed; Leading indicators; NatGas inventory; 5 yr TIPs Auction
  • Friday – PMI Composite Flash; Rig Count

TSLA – Delivers the Goods

With the Q’s on the ropes and wobbling after an Earnings-driven disaster at NFLX and a really bad day at $FB, Elon & TSLA delivered a stellar earnings report after the bell last night.  Consequently the stock is gapping higher and lifting market sentiment with it.  I am not a fundamental analyst, but to those who follow TSLA  they were unanimously glowing in their recaps.   Beats on Rev, Earnings, Deliveries, and margin.  Can it get any better than that?   I was personally impressed by how the company navigated the supply chain issues that literally every other car manufacturer has used as excuses over the last 6 months.  Nothing to do except congratulate the Team over at TSLA!   Their report is lifting prices and sentiment across the markets. It will be up to the other FATMAAN names yet to report to build upon this rally.

Macro Backdrop until further notice

Shrinking Liquidity

The combination of aggressive rates hikes and balance sheet run-off are bearish for markets.  Markets thrive in times of ample liquidity and starve in times of low liquidity.  JPOW & Co. now have a singular mission to knock down inflation by the reverse wealth effect. These guys won’t stop until the market is down substantially. There will be lots of trades both bullish and bearish between now and then, but they’ve made themselves clear, they will insist on the market going down. This will be the over-arching theme from now through the summer.

Persistent Inflation

While inflation may moderate later this year, I think that inflation will be persistent for at least a year. The FOMC’s rate hikes will tighten financial conditions and thus make it tough on financial assets, but it wont affect oil or gas prices, a grain shortage or a myriad of other commodity based inflation inputs that are the root causes of the problem.  s

Commodity Super Cycle

“Spot Prices cure Surpluses; Long-Term Contracts solve shortages”  Jeff Currie Head of Commodities at Goldman Sachs.  Commodities, historically speaking, tend to trend in broad 10 year Boom –  Bust cycles. This is also coincident with capital funding of the sector. The commodity boom of 2000-2008 was met with a wall of capital investment. THis greatly expanded capacity of all manner of commodities. Then from 2012 – 2020 was a period of capital destruction and collapsing returns. The emergence of ESG has constrained re-investment into these “dirty Sectors”.  We are now in the upswing of the commodity cycle.  We are probably in just the first year of the upswing. We are literally YEARs away from seeing supply expand because no capital is yet flowing into the sector.  The exception of course is a recession. A recession will kill demand and cause most asset classes , including commodities.  Here is a 60min podcast that summarizes the commodity situation.  Find it HERE

Earnings Season & Bracket Trades

As earnings season kicks into gear, a reminder that this is prime time for Bracket Trades. Bracket Trades are those trades created when a stock gaps up or down from a news driven event. Bracket Trades are set up as “2nd day trades” where you alarm the high and low of the prior day’s trading range, then patiently wait for price to either break lower or higher from the range.  You then follow price out of the range. I will do my best to help identify them for you, but you can easily find them yourself by doing a sort for “GAP ups” and “GAP Down” on your trading platform.  I add additional filters for only stocks above $10 and at least 500,000 shares traded. You can add additional filters to cut down the sort further. Generally speaking, stocks favor continuing in the direction of the gap higher or lower.

You can find out more about Bracket Trades in the video Run the Player at 1.5x      HERE.

 

INDEX CHARTS

Use the following pivots and levels in your active and swing trading. Added color is provided on the video.  Link above.

SPY Daily

SPY 2hr

SPY 30min

QQQ Daily

QQQ 2hr

QQQ 30 min

IWM Daily

IWM 2 hr

IWM 30 min

 

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