Before the Bell June 22

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

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

Yields / TLT  and $USD Reversal

Yields ticked up 3.6bps yesterday and we got a sharp reversal in TLT right at the confluence of DT resistance and its 200ema. We said yesterday that price was at a key spot. Now we’ll need to watch to see if it was a one-n-done back test or will TLT continue to press higher.  We also got a sharp reversal in the $USD which lifted commodities, and oil in particular. I plan on continuing to post these charts so we can keep our finger on the pulse of the 2 key market drivers.

Oil blows the roof off

Oil was up a whopping 2.57% in Monday’s trading and helped drive XLE up over 4%.   BAC was out with a note saying crude is going to $100.  Being 50% of the entire commodity complex, and the one commodity consumers can track at the gas station, oil will play a big role in the inflation narrative through year’s end. Some fundamental factors are in the chart annotations.

RISK ON –  We may be in a near-term goldilocks zone 

For weeks markets have been wrestling with the growth vs cyclicals / value conundrum.  Maybe the answer is both.  Consider the scenario that the $USD backs off this recent spike and settles into a low -level trading range with yields bouncing around between 1.40 – 1.50% on the 10year.  I think the key is stability.  If the USD and TLT settle into tenable ranges, both Tech and cyclicals can work.  Time will tell.   Yesterday markets surged and in doing so re-captured most of the Friday losses with all SPDR Sectors participating.  Materials, Energy, Industrials, and Financials were the leading sectors and overall helped IWM to outperform.  IWM was the index that saw the most intense selling last week and now had the biggest bounce. Continue to watch the SPDR Sectors for rising / falling tides.   I am still expecting higher vol this week. We’ve already seen reversals of the reversal. Who’s to say they dont jack us around a little more before determining which trends are durable and which ones begin to fade.

$NYMO – Yesterday I pointed out that with the NYMO at -56, the risk / reward for either staying short or getting short into the hole was diminished.  While NYMO does not always nail reversals almost to the penny, this time it came pretty damm close.  Consider integrating $NAMO and $NYMO into your process. I have found these oscillators quite helpful

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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