Before the Bell July 6

Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA  SMH AMD  $USD TLT  Oil NATGAS

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

Seasonality Spike

FUN FACT:  This is the first day of the historically best 2 week period since 1950 as we head into earnings. While we certainly want to have a bullish bias in our outlook and positioning over the next 2 weeks, keep price front and center.  That is, if a sell signal is triggered on a stock / index  you have, you’ve got to honor it and get out.  Seasonal strength and historical averages are great as a backdrop to inform / create our bias, but it is the price signal we trade on.

You’re Never Stuck

Recently a trader I know was lamenting that they were “stuck in a position”.  I responded by saying that they were “never stuck” in a position. And that saying “stuck in a position” is just a fancy way of saying “I am unwilling to take the loss”.   When you want to buy / sell an instrument, it takes less than 5 seconds to find your mouse and click the “execute trade” button. If there are times you feel trapped in a position, peel back the onion.  Are you trapped because you’re trying to protect your ego?  Hoping the stock reverses so you’ll be proven right?   Anyhow, whenever you catch yourself either muttering to yourself or others about your predicament on a given position, dig deeper and figure out why you feel that way. Discovering the reason can / will have a profound positive impact on your trading.

Macro Data Releases Week of July 6Today

  • Tuesday – IHS Markit Services PMI-Final, ISM Non-Manufacturing Index
  • Wednesday – MBA Mortgage Applications Index, JOLTS-Job Openings, FOMC Minutes 2pm ( look for more robust debate around inflation )
  • Thursday – Initial Claims, Continuing Claims, EIA Natural Gas Inventories, EIA Crude Inventories, Consumer Credit
  • Friday – Wholesale Inventories

A Warning from Market Plumbing Savant Zoltan Poszar 

Credit Suisse superstar Zoltan Poszar is sending off warning flares about Reverse Repo.  I been telling you for months about Reverse Repo exploding but lack the knowledge and credibility to connect all the dots between the issue and effect on the Market.  Poszar doesnt have that problem.   He sees Reverse Repo going to $1.3 T  and impacting the yield curve into the Summer.

Find his article HERE

Reflation / Inflation Re-Ramp?

OPEC+ / Russia Stoke Runaway Oil and NatGas Prices

OPEC + has failed to agree upon any production increases as I write this.  We’ve been talking about the perfect storm ( Biden energy Policy / ESG / Lack of CAPEX / No Domestic supply response / Part of EV grand plan, Global Covid re-open )  for weeks.  OPEC developments put further stress on Supply.  The Nov .2014  high for oil was $76.90. We’re there.

Over on the NatGas front, Russia has not shown any desire to ramp NatGas flows through its Ukranian pipeline as it wants to keep the pressure on for completion of the NordStream pipeline into Europe.  NatGas pricing is running.

Coal & Carbon Credits

This has spilled over into a ramp of coal usage by Power plants. ( ARCH / ARLP / BTU / CNX )  BTU is on the verge of a breakout after consolidation. The cascade effect from more robust coal usage is spiking demand for Carbon offset credits.  Yes there is an ETF for that.  $ KRBN. Unfortunately no option chain here. If anyone drills down and finds more ways to play Carbon Credits, please let me know.

Copper

After a sharp correction from overbought conditions, copper has been in stealth rally mode.  $COPPER / CPER / FCX / SCCO  are tickers to watch / track

Gold / Silver

The inflation pressure from energy combined with the Bitcoin wobble has brought a bid back into Gold.   The next resistance level is $1814 on the $GOLD /  Gold Futures charts.  I will do a precious metal / miner review under separate cover.

$USD / $TLT are keys to the Market

Combination of rising dollar and falling rates have put us clearly in Scenario 1 shown in the $USD chart annotations.  We presented these scenarios weeks ago that helped us position in the FATMAAN and higher beta tech segments.  On THe $USD set an alarm at 92. As long as the USD holds 92 then the scenario 1 should continue to work.

Bonds –  Simply put, a breakout above $145 where the 200ema and downtrend line should be bought. That would signal a break of yields below 1.4% on  the 10yr. This too would be fuel on the scenario 1 bull stocks, but would not be so hot for cyclicals, re-opening names, industrials etc.

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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