Tickers: SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX SMH DBA DBB DBC CORN WEAT SOYB WTIC URA
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.
The quote is from George Soros. Stop trying to prove you’re right. Quickly admit that the weight of the evidence confirm you’re wrong; then get on the right side of the trade. Fun Fact: Soros made $500K one Summer in the late 1950’s while he was attending graduate school.
This will be a pivotal week of earnings as much of mega-cap tech reports. Make note of when the big names report, especially if you are in the Q’s or individual names. These names can / will move the entire market.
Today’s 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 25
- Monday – Chicago Fed; Dallas Fed
- Tuesday – Durable Goods; New Home Sales; Consumer Confidence; Case-Shiller Home Prices; Richmond Fed; 2 yr Bond Auction 1pm
- Wednesday – Intl Trade; Retail & Wholesale inventories; Pending Home Sales; Oil Inventories; 5yr bond auction
- Thursday – GDP; Jobless Claims; NatGas Inv; KC fed; 7yr Bond Auctions
- Friday – Personal Income; Employment Cost index; Chicago PMI; MI consumer Sentiment
The Last Hurrah
With all the potential market moving catalysts of FATMAAN earnings behind us, I think the market will settle in and find new ranges. We’ve got the FOMC next wednesday so that is the next big thing. I still am thinking we go lower from here based on the FOMC’s commitment to knock down asset prices with the caveat that bear market rallies can certainly be significant so they never make it easy to simply camp out and wait for the money to print.
I think commodities will do well through the balance of the year. The key will be China and their covid response. If they continue to lock down cities, it will be a drag on demand. Lots of charts below.
Here are the key support levels I have for the indexes.
- SPY $415. 50, $411
- QQQ $317.35
- IWM $188
Copper is at the mid-point of the flag on the monthly chart. $4.50 is a nice objective level to shoot against.
Macro Framework until further notice
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. Here is an excellent 75min video that explains the linkage between global liquidity and capital markets. HERE
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.
Use the following pivots and levels in your active and swing trading. Added color is provided on the video. Link above.
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