Before the Bell June 21

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Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA SMH $TNX TLT $USD $NYMO $NYMO

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 

A light week for earnings but interestingly a mix of names that could be helpful for gauging certain important sectors.   Solar: PLUG / JKS  Home Building: KBH Global Logistics & ecommerce: $FDX   Global Retail: NKE     Travel:  CCL    Restaurants: $DRI

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

About Yields and the $USD

After an initial headfake Wednesday afternoon, yields have taken a sharp move lower and have actually already undercut the Pre-FOMC meeting low shown on Slide 1 below. Slide 2 below shows the corresponding move on bond prices with TLT charging higher to challenge the confluence of the 200ema and downtrend line. A Failure to breakout and the commentary becomes, ho-hum, a kickback rally that failed…happens all the time.  A breakout however is a game changer as rates would be plunging and bond prices breaking out with room to run.  Falling yields would be juice to bubble / EV / Solar / Tech stocks.   Lastly, on the 3rd slide, is the surging US Dollar that has stacked 3 massive candles coming out of the FOMC.  Price is close to taking out OH resistance and if it does would have running room to 93.75.   A rising $USD is toxic to precious metals, commodity complex, and emerging markets.

Oil didn’t get the memo

While inflation hedges and the reflation trade imploded last week, it was interesting to note that oil held its bid and remains perched above the 8ema. Logic would tell you oil should have tanked last week.  When what should happen doesn’t, pay attention.  THere is bearish divergence in the chart to be aware of on PPO so it’s not out of the woods yet.  If oil were to backtest the breakout and the 50ema at $66.40 I’d be a buyer there. Some of the bullish factors are shown in the chart annotations.

Post Powell Reset

With 3 days passing since the FOMC announcement and a major OPEX on Friday, there will be a market reset this week. How it resolves should set the course over the next 30-60 days.  THe key to the whole thing is the path of bond yields.  If bond yields remain either stable or drift lower, that will be supportive of tech and bearish cyclicals / reflation trade / commodities / Precious metals. If rates reverse and go higher, then the opposite.  Key off of rates and the $USD for positioning and keep the SPDR Sectors in focus. THey will collectively tell you which tides are rising and which tides are falling. THat will go a long way toward keeping you on the right side of the trade.

 

Re-Posting – Thoughts on Trading the Meme Names

I’m not one to tell you not to gamble, but a few thoughts if you decide to jump in.

  • Treat all trades like lottery tickets.  Expect to lose it all.  Dont use monies that if lost, will put your trading account or worse at risk.
  • Watch overnight Risk.  One in the hand is better than 2 in the bush.  Don’t underestimate how deep or severe an overnight rug pull can be. Consider taking wins when you can.
  • Market Makers are paid to Win.  These guys are no dummies, They’ve jacked option IV to the moon making options incredibly expensive and thus harder to win. Make sure you know your risk / reward profile before to dive in.  For instance, I priced some $25 strike PUTs in AMC a couple of months out. They were $25. So if AMC went to zero, I would get my money back. Not the kind of trade that makes sense.
  • NEVER SELL NAKED CALLS or PUTS.  While it may be super tempting to sell vol premium at the jacked levels, selling naked options exposes you to UNLIMITED RISK.  If you sell anything, it must be a spread to limit / define your risk.

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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