Tickers discussed: SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX $TNX TLT RSP X CLX
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.
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 1.25x to reduce run time.
Find the Video HERE
Macro Data Releases Week of Aug 16
- Monday – Empire MFG
- Tuesday – Retail Sales, Industrial Production, Bus. Inv., Housing Index, JPOW Speech 1.30pm
- Wednesday – Mortgage Appl, Housing Starts, Oil inventory, 20yr Bond Auction, FOMC Minutes 2pm
- Thursday – Jobless Claims, Philly Fed, Leading Economic Indicators, NatGas inv., 30 yr TIPs bond auction.
- Friday – Rig Count. August OPEX
Cautiously Bullish
It would not take long for me to give you a laundry list of worrisome factoids about this market that would have you under your desk sucking your thumb. The problem is that price is not confirming those numerous yellow flags. FATMAAN remains relatively strong with several at ATH’s. We just had breakouts in XLB, XLF, XLI, XLV, and XLP. I think the right posture is to be aware of the negative worries but to trust price and stay long. Watch your leverage and continuously harvest gains when you have them. The market will eventually pull back but when it does, we will see it and reduce risk appropriately, but for now, remain Cautiously Bullish.
Bond Interest Rate Watch
On Friday, bond rates got slammed in the wake of a horrific UM Consumer sentiment survey that saw confidence drop 13% to a level not seen since 2011. No doubt the relentless covid fear drumbeat weighed on participants. Also weighing are the growing inflation and gas prices. What isn’t clear is how this drop in confidence is changing consumer behavior. The result of all of it is to put a big question mark on the cyclical recovery and by extension, our positioning in the cyclical sectors.
10 year Bond Yield
TLT
As we suspected, TLT found some support at the confluence of the 200ema & 50 ema at $146. Traders should alarm $146 as a signal either to get short if you want to trade it or simply as a heads up that rates are going higher and thus continuing to support an advance in cyclicals / Value / banks etc.
Breadth
$NYA50R – % of stocks above their 50emas
Breadth has seen slight improvements lately but the % of stocks above their 50ema’s is still only 54%. We need the trajectory of this metric to steadily continue higher. A zone between 60-75 seems to be the most sustainable.
$RSP Eq. Weighted SPY
The equal weighted SPY continues to do well and on many recent days actually has outperformed the cap-weighted version ( SPY ). You can see price has just broken out of a $6 trading range. The measured move targets $158. Also please notice price walking up the 8ema and with all the ema’s bullishly stacked below. These will act as support on any pull back.
Focusing on FATMAAN
At roughly 25% of SPY and 40% of QQQ, these mega-cap names largely dictate the direction of SPY / QQQ. Much has been made about “we’re due for a correction” but until we see more evidence in the charts, it’s tough to get too bearish here. For each chart, I give the daily timeframe snapshot and a quick outlook.
$FB
The stock is in a clear uptrend w/ price above all the moving averages. THe next objective is to fill the OH gap to $373. As long as price holds above the lower trend channel trend line and above $356, I view the price action as constructive.
$AAPL
All time highs are bullish not bearish. After consolidating for 2 months, price is on the verge of taking out the all time highs above $150. If price clears $150 buy it and stay long. I think a breakout could take price up toward $160 out of the bull flag.
$TSLA
Price is flagging just below a gap that starts at $720. A gap fill toward $740 will open up a potential move to $770. With price above all the moving averages that are bullishly stacked, the current outlook is bullish.
$MSFT
All time highs are bullish, not bearish. Stay long against $290
$AMZN
Worst chart within the FATMAAN complex. Price has not recovered since it’s big gap down on earnings a few weeks ago. THe main objective now is to hold the 200ema and midpoint of the trading range at $3250. A move below $3250 opens up a lot of downside room with T1 = 3100 and T2 = 2950.
$GOOGL ( Alphabet )
All time highs are bullish, not bearish. You can’t get hurt as long as price is above $2750.
$NFLX
Big picture, price has been trapped in a $90 wide trading range for over a year. Traders can be long against either $515 or the 200ema at $508, but given the soggy trading, I think there are better places for your money while this one decides how to resolve itself.
Fear / Greed Sentiment Indicator
Folks remain bearish but the meter is steadily creeping higher. IMO it will be out of character for the market to sell off with this many people already scared. Rug pulls usually are orchestrated to hurt the most people by happening when everyone is bullish and cant see it coming.
INDEX CHARTS
A detailed walk-through of the levels and trading strategy for the indexes is given in the video ( link above) . The static charts are provided for reference. The FATMAAN names are also reviewed in the video along with trade ideas and other charts of interest.
SPY Daily
SPY 30 Min
QQQ Daily
QQQ 30 min
IWM Daily
IWM 30 min
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