Before the Bell May 23

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Tickers:  SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX SMH  ARK Complex

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.

Inspiration –

Yes, continue to study markets, but I am convinced that your study of your own mind will be more impactful on your progress as a trader. Study your rigidity, why you cling to narratives that have been proved wrong by the market, or the rage or desperation that occurs after a losing streak. Markets are constantly evolving but if you can train your mind and get it on an ascending arc of flexibility and self-control then you’ll be well equipped to handle any of the rips, dips, and curve balls the market has in store for us all

Earnings

Some marquis names this week. ZOOM, BBY, JWN, DKS, NVDA, SNOW, SPLK, BABA, M, DLTR, DG, BIDU, COST, ADSK, ULTA, WDAY,

Today’s 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  1.5x to maximize efficiency without loss of clarity.

Find the Companion Video HERE

Macro Data Releases Week of  May 23

  • Monday – Chicago Fed; Bostic @ Noon
  • Tuesday – Composite PMI, New Home Sales, Richmond Fed, 2 yr Note Auction 1pm
  • Wednesday – Durable Goods, Oil Inv., 5yr Bond Auction, FOMC Minutes
  • Thursday – GDP, Jobless Claims, Pending Home Sales, NatGas Inv, KC Fed, 7 yr Bond auction 
  • Friday – Intl Trade, Personal Income & Outlays, Consumer Sentiment, Rig Count

Dead Cat 2?  

It should be clear at this point that we’re in a bear market.  Bear markets are filled with teeth rattling rips, dips and a whole host of headfakes and frustrating moves. Last week was a good example. I was positioned for the brief rally to extend but that idea was an epic fail. Blame it on OPEX or whatever, but it does not matter. Now after last week’s double bottom, we rallied into the close and have extended that rally in the premarket this morning. I think the market, at some point, try’s it best to put in a believable bounce to squeeze some shorts and offer some hope to the bulls. My conviction isnt high.  I am mostly long, but those longs are focused on energy / materials sectors that have been holding up the best on these down days. If levels can be recaptured on the indexes and FATMAAN names, I will do my best to grab some long exposure there on the fly. Lastly, there is a fair degree of month-end buying supposed to happen this week. Let’s see if this materializes.

Saxo Theme Basket Performance

$MTUM Re-balance portends to be impactful

The $MTUM ETF has traditionally been piled into tech stocks because they’ve been the momentum names. But now as tech has stalled, the momentum is in energy and materials. $MTUM is going to do it’s semi-annual re-balance next week. THe key thing to understand about this rebalance is the relative size of the assets. Imagine selling down a position in AAPL that is a $2.4T market cap company and then piling those assets into energy names 1/10th the size.  Think a firehose into a thimble. THis could really spark the next leg higher in energy. Certainly big names like XOM and CVX will see inflows. XLE is an easy way to play given XOM / CVX are about 50% of this cap weighted index.  On the flip side is the selling of mega cap tech which could be significant and may move the needle. Find and ETF web-site to look at the top components of the MTUM ETF where most likely a lot of selling is slated to occur.

Do your homework on this one.  This is a thumbnail of what’s going on.   Find the article HERE

Month-end Buying

Normally the week after a big OPEX is a dangerous time for markets. As lots of delta and gamma roll off, markets more easily able to find a new level of trading. THis month-end buying may tilt the balance to the upside. Also note, FOMC $65B of balance sheet QT is slated to start on June 1.

Factors favor a bounce

Prospects for Bitcoin are ugly

Perhaps on of the biggest bearish factors is the posture of BTC. It’s had an almost perfect correlation to the Naz over the past couple of years. We’ve pointed out repeatedly that this asset class, both technically and fundamentally, looks terrible and is poised to go lower. Watch BTC as a leading indicator on the Q’s.  THe panel below shows the relationship to reduced liquidity ( tighter financial conditions )  Keep in mind the QT has not even started yet and another 50bps from the FED is coming in just a few weeks.

Macro Framework Spring / Summer 2022

Find the Blog Post HERE

Earnings Season & Bracket Trades

As earnings season kicks into gear, a reminder that this is prime time for Bracket Trades. Bracket Trades are those trades created when a stock gaps up or down from a news driven event. Bracket Trades are set up as “2nd day trades” where you alarm the high and low of the prior day’s trading range, then patiently wait for price to either break lower or higher from the range.  You then follow price out of the range. I will do my best to help identify them for you, but you can easily find them yourself by doing a sort for “GAP ups” and “GAP Down” on your trading platform.  I add additional filters for only stocks above $10 and at least 500,000 shares traded. You can add additional filters to cut down the sort further. Generally speaking, stocks favor continuing in the direction of the gap higher or lower.

You can find out more about Bracket Trades in the video Run the Player at 1.5x      HERE.

 

INDEX CHARTS

Use the following pivots and levels in your active and swing trading.

SPY Daily

SPY 1 hr

QQQ Daily

QQQ 1hr

IWM Daily

IWM 1 hr

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