Before the Bell May 24

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Tickers:  SPY QQQ IWM FB AAPL TSLA MSFT AMZN GOOGL NFLX SMH  ARK Complex CANE UNG WTIC DBC WEAT COPPER

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 –

I know it hurts in real time, but what ever turmoil you experience in your trading life, it is strengthening you for what is to come. Trading a VIX at 30 for the 4th time wont be nearly as terrifying as the first. You  will be calmer and more resilient from the past experiences.  Long-time market participants know success is playing the long game. To marshal and save trading capital through these trying times so that you can be in the game later on as a more experienced trader.

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

Rally Wrecker  

Gonna keep it short n sweet here. SNAP dropped a tape bomb AH last night as it pre-warned that Ad revenue had fallen off a cliff and that they’d likely miss Q2 expectations below the bottom of their previous guidance.  THis sent a shock wave through futures and the tech space in particular.  $FB / $PINS / $TTD / GOOGL got whacked on the read thru on digital ads but also AAPL and MSFT took hits too.  On that announcement, NQ futures gapped down 2%.  I cant recall another time that such a piss ant company had such broad reaching effects on the market.  Keep in mind this also speaks to the low liquidity out there. There is no volume. Moves are being amplified by the lack of participation in both directions.

I am keeping my long bias until proven wrong. $5-$6B a day in month-end buying is scheduled for the balance of the month. In the video I give you the key levels to watch that if held would keep the prospects of a rally intact. It’s all about holding them to keep this rally alive.

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.

( Re-Post if you missed it )Factors favor a bounce

Commodity Round Up

Commodities remain a bright spot within markets. Grains managing to grind higher. Oil is firm despite the kitchen sink being thrown at it. And NatGas up 9% after opening down 3% yesterday is back to rip your face off mode. So much so that the prior highs of $13 is the upside target. Charts of interest below.   Also, marine shippers remain strong.  $SBLK reports after the bell. This should shed more light on the sector.

$CANE

Testing a breakout above $10 with a void above.

 

$COPPER

A couple weeks ago I posted the chart with price at the bottom of the consolidation zone. While not a dramatic move, price moving higher off support.  $TECK / $FCX / $SCCO / $SQM are some names to check out

$DBC Blended Commodity ETF

Alarm $28.50 for a potential breakout. Nice set up with an ascending triangle pressing for the breakout.

$NatGas and $UNG  the Widowmaker

Rocketing higher. On the monthly chart, the door is open to test the old highs around $13. On $UNG $30 is an objective trading level.

$WTIC OIL

Remains remarkably resilient despite China shutdowns and recession threat. There is no supply out there. A break of $115 sends this to the highs.

$WEAT  Grains keep grinding

Showing WEAT as an example but $CORN and $SOYB charts are similar. Global shortages and junk planting weather here in the states have kept a bid under the grains.  $DBA is another way to play the grains but since it is blended with other AG inputs like livestock etc is is not a direct 1 to 1 substitute for the grain charts.

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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