Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA TLT SQ AMD Sector Rotation Strategy
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 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. ECB meeting
- Friday – Flash PMI
Rotation Game
The outperforming sectors yesterday were XLB, XLE, XLF and to a lesser extent XLI. We also saw that outperformance reflected in IWM that saw prices increase 1.8% as both SPY & QQQ were in the 0.8% range. THis aligns with Scenario 2 detailed in the video…a rising rate environment where cyclicals, re-opening plays outperform.
Now, we have mega-cap tech reporting next week. They themselves will move the headline indexes on their own. What we need to be attuned to is the bond rate trend. A rising environment will hit the bubble stocks like ARK Invest complex, ZM, and other high valuation names. I think megacap tech will hold up best in tech because of earnings support. Be ready for a scenario where SPY / QQQ stalls / wobbles / declines but also where small caps are ripping.
Rising Rate Environment Areas of Interest.
- Materials. Commodity and Specialty Chemicals
- Metals and Mining. Copper, Aluminum, Steel
- Airlines, Delivery services , marine transport, etc
- Regional Banks…………more highly levered to rates than mega banks
- Travels, Hotels, re-opening names.
A two day move doesnt make a trend and we’ve seen plenty of headfakes and rate volatility over the past month. Lets watch carefully here before piling into the above sectors. We have 2 big catalysts on the horizon. Mega cap tech earnings, and the FOMC meeting both are next week and both could be game changers.
FATMAAN Earnings
July 20: NFLX July 26: TSLA July 27: GOOGL / MSFT July 28: FB / AMZN / AAPL
Chart Set ups
$SQ Square
Although not shown well in this view, there is resistance at $260. Even with the prior 2 day move, a break above $260 is a BUY in my opinion with the target being in the $270-$275 range. I am long from yesterday’s breakout above $250. Earnings are not until Aug 5. If mega cap tech earnings reactions are positive next week and $SQ fomo kicks in, this could see $300. A trader can dream cant he?
$AMD AMD – semis
Semis have been rebounding strongly since the rug pull correction. AMD had broken the downtrend and is at a layer of resistance at $89.30 on the hourly chart. I like it long above $89.30 looking for 91 and then $93 ahead of earnings on July 27th. I am long and plan to be out of the position prior to the earnings print.
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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