Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA USO TLT $NAMO / $NYMO Strategy Session
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 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 July 19
- Monday – Housing Index IBM after the bell.
- Tuesday – Housing Starts ; Redbook
- Wednesday – Oil inventory; 20 yr Bond Auction
- Thursday – Jobless Claims, Chicago Fed. EIA NatGas Inventories, KC Fed. 10 yr TIPS Auction.
- Friday – Flash PMI
A simple thesis here. THe oscillators and other indicators are stretched to the downside and favor a bounce. Now we need to see if the market agrees.
Reasons to Pay Attention – UPDATED
- Post July OPEX – Typically there is elevated volatility coming out of a monthly OPEX. Yellow Flag
- Trendline Violations: SPY tested the 50ema which held while the QQQ is testing the 20ema.
- Breaks below the 20ema and traders should definitely get defensive with their positioning.
- Bearish Divergences: They’ve been persistent for months. Now though, because prices have violated trend lines, the bearish divergences will take on more significance.
- Seasonality. Mid to late Summer seasonality leans bearish. Earnings season reactions will play a big role. From now thru Labor day, lots of people will be going on vacation. If you thought volume was light in July, you’ll be checking SPX for a pulse in 2 weeks. Potential for outsized swings with no one home.
- FOMC – In Blackout period ahead of the July meeting. . FOMC won’t be able to comment / soothe markets. Meetings at the end of July and Jackson Hole in August. Potential Fireworks with taper signaling
- Breadth Stinks: NYA50R is at 26% above 50ema. This measure is entering a bounce zone. .
- FATMAAN Earnings: NFLX report AMC; Stock reaction may be harbinger for balance of mega-cap tech that reports next week. If earnings reaction is lower, the broad market averages are going lower. It’s just math with FATMAAN like 25% of the index. If earnings resolve higher, we go higher.
- Earnings at Large: Bank earnings have been greeted with a thud. Lots of reporting over the next several weeks. Expectations are high with the potential of see the news.
- Semis – THe group is a risk on / off indicator and the price action stinks. Off nearly 3% yesterday and with 2 failed breakouts in as many weeks.
- Small Caps – IWM is usually also viewed as a risk on/ off group. It’s rolling over. Bulls would like to see it stabilize and reverse but we may need to go to the bottom of the range.
- Oscillators – NYMO / NAMO Have entered oversold conditions making fresh short positions a relatively low risk-reward trade.
- Sentiment: Not many bears out there. Fund managers are already all in. Short interest is nearly at record lows. There wont be any air breaks if they pull the rug.
- FED LIQUIDITY: They are still pumping and that’s bullish
- Treasury General Account Drawdown: The Treasury has added about a trillion dollars of liquidity over the past 3 months by drawing down their general account. Their target is a $500B balance. That level will be achieved in 2 weeks. Then that spigot gets turned off.
I hope that is enough reasons to pay attention. Watch and Listen closely. Be in a position to move once we get resolution.
July 20: NFLX July 26: TSLA July 27: GOOGL / MSFT July 28: FB / AMZN / AAPL
Bearish Breadth and the Oscillators reach extremes
The $NYA50R eroded further with yesterday’s selling and now shows that less than 260% of NYSE stocks are above their 50 dma. As you look across the series, this is about the time to expect a bounce. The Oscillators $NYMO @ -90 and $NAMO @ – 80 have gone full retard to the downside. While additional selling can certainly occur, the rubber band is being extended and when the happens you get those snap-back rallies. Might even be where the term comes from. Anyhow, these are locations where you want to be scaling out of shorts and layering in longs. least a bounce coming. This is the perfect set up to suck in a bunch of shorts just in time for a bounce. THe prediction game is fraught with peril but from my experience you dont want to mess with NYMO. As you can see from the historical record we are at a location where a reversal comes sooner than later.
A Simple Bull Market / Bull Stock Checklist
Being a fear-monger is popular. Bearish tweets and doomsters are more widely followed than a tweet saying “stay long”. Use this simple checklist to tell if the market or a particular stock you follow is in bull mode. THe list is not intended to be the end-all checklist, but if you find yourself saying yes to most of the questions, you can certainly come out from under your desk and delay subscribing to “Doomsday Prepper” magazine.
- Is Price at an All-time high? All time highs are bullish, not bearish
- Is price above the 8ema and 20ema? Price above the fast moving averages is as bullish as it gets
- Are the ema’s bullishly stacked? if from top to bottom the 8 is above the 20, 20 above the 50 and 50 above the 200 tells you the trend is higher and in bull mode.
- Is the slope of the moving averages positive? If the moving averages are tilted positive and rising; its bullish
- Have any trend lines been violated? Draw a trendline connecting the lows of the recent trend. As long as price stays above, its bullish. If a trendline is broken, pay closer attention.
- Are the indicators operating in their bullish regimes? If RSI is above 50 and PPO momentum is above the zero line, the indicators are bullish..
Use these simple questions to ally any fears you have about the market or favorite stock but confirming it’s bull market status.
$IWM 30 Min
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