Before the Bell July 9

Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA SMH  $TNX $USD TLT  USO BTU CAR KRE CVNA COST

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 6

  • 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; G20 Meeting Kickoff

Wrapping up a Wild Week

Lots of cross currents this week with the rug pull in rates and other turbulence. Largely speaking the top line of SPY and QQQ have remained unchanged. IWM has felt the pain as falling rates are bearish the IWM components like cyclicals, re-opening, financials, etc.   Breadth has narrowed with big cap tech holding things together. Light summer volumes leave markets vulnerable to outsized moves while many traders are on vacation.  Let’s see how we wrap up this crazy week.

$TNX / $TLT 

Bond yields have dropped about 20bps in 10 days and closed below support at 1.30.  Although we are bouncing premarket, keep an eye on yields as they are driving flows into / out of cyclicals, financials, re-opening, reflationary trades.  Falling yields are bearish this segment of the market. Watch IWM as a barometer of this segment because it is loaded with these names.

Over on TLT, we broke out above downtrend resistance and the 200ema.  I have dropped in the overhead resistance levels.  $155 looks like a particularly tough level.  I am long TLT and will be looking to close my position if / when price gets to that level.

Oil / USO

Price broke back above $49.25 after a 10million barrel inventory drawdown across the oil complex. Use $49.25 as a pivot even if you’re not trading it.  OIL is highly correlated with SPY. Higher oil prices are supportive of SPY. If oil is moving down, it will be hard for SPY to advance. I think there are structural forces in place that are bullish for oil. At a certain point, if we see a durable bottom being put in, I think it will make for a compelling buy the dip opportunity.

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.

Managing the Tape

  • Keep level-headed and your wits about you.
  • If you feel flustered, step away and compose yourself.
  • Manage level to level.  We are in a bull market. In order for the market to go down a lot, it has to go down a little. We will know when to be cautious or even bearish based on the levels.
  • If you are unsure of things, there is no shame in going flat and waiting for things to stabilize.
  • The most important thing is to RESPECT YOUR STOPS.   Accept the papercut and avoid more pain.   Live to trade another day. 

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

$IWM 30 Min 

 

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