Tickers discussed: SPY QQQ IWM China Contagion Risk / 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.
Massive week ahead with everything on the line for QQQ and SPY as all of mega-cap Tech reports. If the earnings reaction is positive, we go higher. If they dump these names we go lower. It’s just math………..the FATMAAN names are 40% of QQQ and 25 % of SPY
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 26
- Monday – New Home Sales; Dallas FED, 3mo, 6mo and 2yr bond auctions; China / US Trade talks off to a rocky start
- Tuesday – Durable Goods, Case-Shiller, Consumer Confidence, Richmond Fed, FOMC meeting starts, 5yr auction
- Wednesday – International Trade Numbers, Retail / Wholesale inventories, Oil inventory; FOMC Announcement 2pm, JPOW presser 2.30pm
- Thursday – GDP, Jobless Claims, Pending Home sales, EIA NatGas Inventories, 7 yr Bond Auction
- Friday – Employment Cost Index, Personal Income, FOMC Bullard at 9am, Chicago PMI 9.30am, Consumer Sentiment 10am
Contagion Risk of China’s Doom Loop
It all started with Jack Ma popping off in Fall 2020 prior to his ANT Financial IPO. The CCP had other ideas. They squashed the IPO like a bug and Ma received a FREE extended Vacation at Xi’s Fingernail Factory Spa & Resort where he wasnt seen for 4 months. The next high profile event was the DIDI IPO where Government officials told DIDI not to list on the NYSE but they did it anyways. Pissed off beyond belief, the CCP, directed by Xi, set out to teach everyone a lesson. For Profit Education name like TAL, EDU, GOTU woke up the other day to discover they were now non-profits with their stocks going to zero. The doom loop is widening and worsening to include nation champions like BABA, Tencent, BIDU and dozens of others.
Being long China is now Toxic
In last week’s Weekend Profit Navigator, we discussed the possibility that hedge funds may decide that being long China names to be untenable, indefensible, and unexplainable to clients…..valuations be damned. We are seeing that outcome unfold as these names are being wholesale liquidated. Xi could care less about shareholder value and there is a possibility that shareholder value destruction is the point of the exercise.
If the 2014-2016 period we used to stay up for the 9.30pm China open to see if it was going to be up 7% or down 7% because there was a linkage to US Markets. That direct correlation has backed off in recent years, but this is the kinda thing that can spread like wildfire as we sit here with record valuations. We also may find the contagion is POSITIVE for US stocks as global investors flock to safe capital markets. Regardless we have to be ready either way. The risk seems like more than than a talking point.
Market Ear China Contagion Graphics
A fantastic summary of the many facets to the story.
China’s Margin Debt is Maxed Out
Hello Sir, you don’t know me, but I’m your Margin Clerk. When do those calls begin? Can you imagine the result?
Early Signs of a Regime Shift
Yesterday we saw early signs of a rotational Shift. $COPPER was up 4% closing on the highs and has been up 10% in 2 sessions. Names like FCX, SCCO, CPER, COPX responded in kind. We also saw Steel make a move ( SLX ) with BHP / RIO / BHP / CLF / X etc make nice moves. Also, Energy Equities led all sectors. What we did not see was a move in IWM and we did not get breakouts in the key cyclical ETFS cited below. Holding fire until Powell clears.
Rising Rate Environment Areas of Interest.
- Cyclically focuses ETF’s to watch.: XLB, XLE, XLF, XLI, KRE, IWM
- Set alarms on the above EFTs for further confirmation of the move.
- Traders can then drill down in specific sectors for invididual names if desired
- Materials. Commodity and Specialty Chemicals
- Metals and Mining. Copper, Aluminum, Steel, XME
- Industrials. HON / MMM / GE Infrastructure names
- JETS / Airlines, Delivery services , marine transport, etc
- KRE; Regional Banks…………more highly levered to rates than mega banks
- Travels, Hotels, Cruise Lines re-opening names.
July 26: TSLA July 27: AAPL / GOOGL / MSFT July 28: FB July 29 AMZN All earnings after the bell
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
IWM 30 min
Get inspired, empowered and prepared.
As the host of Trader’s Profit Compass, I work hard to inspire, empower, and prepare aspiring traders to face the markets with fortitude, quiet confidence and inner calm. It’s a protein-rich, sugar free environment without ego or judgement. While I can’t promise that joining our group will change your life, I’d like to think it will help your trading. Give it a spin! Nothing to lose and potentially much to gain.
Our group of aspiring traders are into active swing trading using technical analysis to find objective, high-probability, low-risk trades. Using these processes we’ve been fortunate to be winning; not perfect but winning. If that is appealing to you, join us! I’d like to think you’d benefit from the work. You’ll get premium content 6 times a week including a copy of my Daily Profit Compass, Weekend Profit Navigator, along with other actionable content delivered directly to your mailbox. You’ll even get an invite to our new trading room on SLACK.
Registration is simple and FREE Visit our homepage HERE