Before the Bell Jan 10

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Tickers:  SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX SMH XBI ITB ARKF ARKG ARKK ARKW

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

Quote is from Market Wizard Larry Hite. Not much I can add to it. Somewhere in your process, answer the question “How much can I lose?”

 

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.

 Find the Video   HERE    

 

Macro Data Releases Week of Jan 10

  • Monday – Wholesale Inventories; Bostic
  • Tuesday – NFIB index; Redbook; Ester George.   Jerome Powell nomination hearing
  • Wednesday – Mortgage applications; CPI; Atlanta Fed Inflation; Oil inventories; 10yr Bond Auction; Beige Book
  • Thursday – Harker, PPI final; Jobless Claims, Brainerd; NatGas inv; Charles Evans; 30 yr bond auction; Fed Balance sheet
  • Friday – Retail Sales; Import/Export Prices; Ind. Production; Business Inventories; Consumer Sentiment; John Williams

BEARs gun for CONTROL

Bears do not have control of the tape, but they are close. In both the charts and the video I give you those key levels. THe main thing now is to stay flexible, know your levels, and respect your stops. As covered last week, the FOMC regime shift is causing turbulence. Until this resolves bearishly, the primary trend still favors bulls.

Re-Post – Emerging Sector Rotations

Here is a 10 day rotation study.  

What’s in?   XLE / XLB / XLF / XLY / XLI Cyclicals

  • Inflation Fighters – Real-World companies with pricing power.  Consumer names with strong brands and market share will raise prices.
  • Energy & Materials – Systemic and long-standing under investment in Basic Materials and energy.   XLE as a % of the SPY is at 50yr lows down around 2%.  What if it simply goes to 25yr lows at 4%?
  • Financials – Companies that benefit from rising rates.

What’s Out?  XLK / XLU / XLP / XLV / XLC

  • Tech – Especially high-valuation / non-profitable tech. ( ARK Complex )    Biggest market risk is if the big money boys turn on the Generals
  • Ponzi’s –  Companies in any sector that are either over-valued to the point of absurdity or in fact have no path to profitability…EVER    Example: SaaS companies, despite recent rug pull, still trading at 30x sales instead of 50x sales
  • Rate Sensitive Sectors.    Folks gravitate to Utilities, Staples, and REIT’s in periods of falling rates and low inflation as bond proxies.  Inflation and rising raates destroy the value proposition for these sectors.
  • XLC – Note that I included these because GOOGL / FB are 44% of the index. But you’ve also got all that Social Media stuff in there as well.

In the days ahead, look for more rotation studies where I will drill into the Industry Groups to get further refinement on favored / unfavored groups.

All about VALUE

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 2 hour

IMO stay bearish below $$470.  Bear flag measured move is a projection, not a prediction. Technicians gravitate to beautiful symmetry such as this but price does what it wants and with the Jobs report before the bell as a catalyst, price could easily blow past and lines on the chart.

SPY 30 min

QQQ Daily

QQQ 2 hour

The bottom of the box at $380 is a massive level. While price holds above the marauders will be held at bay.  A break below however should bring in more selling and open the door to a $20 measured move to $360.

QQQ 30 min

IWM Daily

IWM 2 hour

Nothing really matters on the downside except $210.  THat is support for a consolidation range that has extended for a year. A break below, from a technical perspective, would look a lot like a market top for small caps. Again, the bear flag projection is not a prediction. It’s there to give you a target if in fact the bear flag breaks and price takes out the prior low at $217

IWM 30 min

 

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