Before the Bell Dec 21

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Tickers:  SPY QQQ IWM FB AAPL TSLA  AAPL AMZN NFLX GOOGL SMH

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

Focus on Gratitude

THe holiday season is a great time of year for reflection and taking stock of all the things you’re grateful for.   Teach yourself to be thankful for something every single day.  Grateful to have capital to trade. Grateful for belonging to a group of aspiring traders that love you and will help you get better.  Maybe grateful that your partner is supporting you in your trading efforts despite you possibly not having much to show for it. Regularly remind her that without her help, you’d likely be wandering the forest alone. Be grateful that God gave you the ability to learn and the drive to work hard.  When times get tough, remind your self that there are millions of people that would give anything to be sitting in your chair at this very moment.

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- 1.5x to reduce run time without loss of clarity.

 No Video Today; will return soon. 

 

Macro Data Releases Week of Dec 20

  • Monday – Leading Economic Indicators 10am
  • Tuesday – Biden VAX speech today; not sure of timing. 20 yr Bond Auction
  • Wednesday – GDP; Consumer Confidence, Chicago Fed; Existing Home Sales; 5 yr TIPs Auction
  • Thursday – Jobless Claims; Durable Goods; Consumer Sentiment; New Home Sales
  • Friday – Nothing

Moderna injects some optimism

Yesterday saw heavy early session selling across all the indexes.  Mid-Day Moderna came out with some positive news on its booster effectiveness on Omicron which gave the market a reason to rally. Losses were cut in half by the close but the indexes remained off 1%.  I don’t place a lot of weight on reasons stocks move the way they do. Now I think the right mindset is to be ready for higher Vol into the new year as  covid developments, Fed Tapering, and low holiday liquidity blend together for larger than normal intraday moves.

Technical Trading Cheat Codes.

In your trading, keep the active trading game plan at your fingertips.  Keep in mind this is a cheat sheet and not meant to applicable to every situation imaginable. THat said, the rule set should keep you out of major trouble…especially if you are newer to technical trading.

  • EMA Rules:
    • Price above all ema’s >> Full BULL
    • Price above the 20ema:  Bull look; buying a pull in to the 20ema, especially if there is technical support nearby, is often a good trade location for getting long.
    • Price between the 20 & 50 emas:  Tactically defensive.  Once the 20 is lost, the next move is either structural support or the 50ema. The chart is still bullish but care needs to be taken to only get long if price comes into support and stabilizes.
    • Price at the 50ema:   I think this a good level to use as a bull  / bear pivot.  Bullish if it holds; Bearish if it doesnt.
    • Price below the 50ema:  Defensive posture and potential shorting opportunity. Not much good happens below the 50ema.
    • Price at the 200ema.   Another key pivot location as it is the last chance for bulls to save the chart.
    • Price below all the moving averages:   Full BEAR
  • Trade level to level. 
    • Recapturing levels from below is bullish and represent buying opportunities.
    • Losing levels from above is bearish and represent selling opportunities.
  • Buy Support / Sell Resistance. 
    • If price moves into support and shows signs of stabilization it is a low-risk objective buying location w/ a stop just below.
    • If price moves into a well identified resistance area and the price advance stalls, it is an objective place to SELL with a stop just above resistance.
  • Breakouts and Breakdowns
    • Breakouts relative highs are buying opportunities
    • Breakdown below a prior low are selling opportunities.
    • In both cases set a stop near by and honor it.  This market has a lot of 2-way action.  Honoring your stop is the only way to prevent getting your face ripped off….a papercut seems more appealing.
  • Other tips on trading higher- vol environments
    • Trade smaller.  In higher-Vol environments you can make just as much as having a big position in a low vol market
    • Powell announced a doubling of the Taper rate to $30B a month and QE purchases to wrap up in March. The FOMC also expects to have 3 rate hikes in 2022 and 3 in 2023.  Interestingly the bond market didnt move an inch.  Also the Dot Plots seemed to indicate that the Fed thinks inflation will be 2.7% next year when it is close to 7% now. So maybe the FOMC thinks

Market Insights

ESG – Energy Stops Growing

Oil discoveries at their lowest since 1946.  That’s what happens when the power brokers declare war on your sector, then institute polices supporting that view. Don’t let yourself be fooled by the recent dip in oil prices.  I think it will prove to be a buying opportunity.  In an earlier post I stated Frackers have been eating their seed corn since Covid.  That is, completing their “drilled well inventory” without drilling enough new ones to replace the deficit draw down.  I think you’ll find a steadily rising price over the next couple of years with intermittent pull backs.  Let’s see how it plays out

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 2hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2hour

IWM 30 min

 

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