Before the Bell Jan 5

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Tickers:  SPY QQQ IWM FB AAPL TSLA  AAPL AMZN NFLX GOOGL SMH ARKF ARKG ARKK ARKW FCX AFRM

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 – Cornerstone Efforts

As 2022 begins and you strive for more happiness, better and more productive relationships, along with more consistent and profitable trading results, doing so with a calm and self-confident mind will make all the difference. I would go as far to say that if you have a discombobulated and chaotic mind any energy you spend on the above efforts will likely either be wasted or confirm that what you really need to spend time doing is working to calm your mind.  Calmness of mind within a framework of quiet confidence are cornerstone attributes required to make meaningful progress in most endeavors…..certainly for anyone aspiring to successfully trading markets.

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 3

  • Monday –
  • Tuesday – ISM MFG, JOLTS
  • Wednesday – ADP, PMI, oil inventory, FOMC minutes 2pm
  • Thursday – Challenger Job cuts, Jobless Claims; Intl Trade in Goods & Services, Factory Orders,  NatGas inventory
  • Friday – FOMC Trio of Speakers;  Daly, Bostic, Barkin

Ponzi’s & Bubbles – The Biggest Losers 

Re-iterating my call for rough waters for the Ponzi’s and Bubbles.  Ponzi’s and outright frauds are companies that have literally no path to profits. During a doubling of the Fed’s balance sheet to $9T and massive fiscal spending, it’s no secret that assets found almost anything…especially if it had a sexy story.  Bubble stocks are those that may be marginally profitable but are selling at wholly unreasonable valuations such as 35 -50x next year’s sales.  Companies such as these should get devastated in a rising rate / inflationary environment.  But Chris….you’ve already missed the move.  Yes, I’m embarrassed to have missed some of the gravy train shorts such as PTON and ZM, but you know what?  Stocks can go down farther than you think.  The best time to short some of these was 6 months ago, but the 2nd best time is close.

Cathie Wood has done the hard work

It so happens ARK Invest’s whole business model and strategy is to invest in these long duration assets.  She’s even grouped them by sector.  I think its a great vehicle to use if you’re interested in eliminating single stock risk. Cathie has likely done  good job in holding things together as well as she has with bubble gum and bailing wire so far by funding redemptions with the more liquid names. That said, she is the majority owner of a whole raft of illiquid names.  If I’m right and she is forced to liquidate these illiquid names, they’ll be no bidders.  It will be a Hemingway scenario. They went down slowly at first, then suddenly.   THe charts below clearly give you the levels to alarm and be focused on.  Notice also that the RSI and PPO profiles are in their bearish regimes.  Fundamentals and narratives aside, I’m going to follow the technicals as you should.  Honor stops and if the trade starts to work, stick to your allocation strategy. These names can be volatile.

Trades about to Happen

AFRM

A juicy $15 gap to fill within a thin zone of volume over price support.  Alarm $85 and look for a gap fill to $70 as a first target. If things get ugly, $57.50 is a definite possibility.

FCX 

Copper is again making some noise. Price is printing a nice flag on the daily. A breakout targets the prior highs at $44.5.  I’d be a buyer on either a breakout or a back touch of $41.

For those that want to take a longer view, check out the Weekly chart in the second panel below. Price is consolidating the first $40 leg of the move. Simple TA math would target $72 on a weekly breakout. ( $32 base of flag plus $40 = $72 as bull flags fly at 1/2 staff )   If the EV market adoption picks up steam, it will dawn on folks that given there has been no capital investment in Copper in over 10 years and it takes 10 years to permit a new mine, nevermind the time it takes getting it operational, that copper is too cheap and the world is too small. Longer term players can alarm $44 and be ready to go with a duration long. 

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 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30 min

 

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