Before the Bell May 12

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

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 

Although we are on the downside of earnings mountain, still plenty to keep us busy.

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

Upgrades / Downgrades

Traders brace for CPI Print

The CPI print is at 8.30 this morning. Will the inflationistas get confirmation the the economy is heating up or will the data underwhelm casting doubt on the reflation trade?  Traders have piled into re-opening / inflation trades in recent months ( Banks, commodities, cyclicals, value etc ) in anticipation of a hot economy juicing inflation. As recently as last week, Janet Yellen let it slip that we may need to raise rates. FOMC Governors are asked at every opportunity when are they going to start thinking about, thinking about tapering.  In our personal lives, inflation is raging all around us, but government figures are funny. Lots of times they under-report inflation or even tell us there isnt any at all.  Gotta wait and see.

Potential Market Reactions

Hot CPI:  Yields rise / Bonds fall, Financials , Cyclicals, Industrials, commodities rise.   Bubble tech probably comes under more selling pressure

Soft CPI:  Kills taper talk for a few weeks; opposite market reaction. Tech would likely see a bid while the cyclical trades probably trading on the soft side.

Usually it isnt as simple as the above which are generalizations. Like we saw on the big jobs miss, yields cratered initially but closed on the highs of the day.  Dont let the initial knee jerk knock you off center…..let the market settle in and take it from there.

Checking on on the $USD

After bottoming out at 89 in December, the Dollar put in a weak fib relieve rally / bounce. Now that bounce has appeared to have played out as price rolls over.  The key level to flag / alarm in your system is 89. A break to fresh lows would likely juice commodities including oil, precious metals, the value trade, and EM countries.

Checking in on Bonds

Much like the Dollar, Bonds put in a bounce but has been effectively capped by the declining 50ema in green. Yesterday price dropped below $138 which was a rather important price level. Note the large volume / price bar to the left at $138. The next key level is $135. A break below likely test the prior low in the $132’s and brings in a fresh wave of sellers.  Today’s CPI print will likely move the TLT needle, but which way?  The talking heads keep saying rates are rising or are going to rise. If they are true, bonds will sell off. I think the recent high yield was 1.74 % on the 10 year. If we take that out in the weeks ahead, there is a resistance level at 1.92% but then here comes 2%.   If the rates rise, that will put pressure on the bubble stocks again.

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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