Before the Bell Nov 24

Tickers:  SPY QQQ IWM FB AAPL TSLA  AAPL AMZN NFLX GOOGL 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 earnings season is quickly coming to a close and we have a shortened holiday week, there are still a few marquis names on he board for this week including: ZM / DKS / DLTR / DE / FUTU / ADSK / GAP / JWN / HPE / DELL / AEO / ANF

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- 1.5x to reduce run time without loss of clarity.

Find the video HERE

Macro Data Releases Week of November 22

  • Monday – Chicago FED; Existing Home sales
  • Tuesday – Flash PMI; Richmond FED; 7yr note auction 1pm
  • Wednesday – Big Day……Durable Goods; GDP; Jobless Claims; Intl Trade; New Home Sales; oil inventory; Personal Income; Consumer Sentiment; NatGas Inv.; FOMC Minutes at 2pm
  • Thursday –  Holiday
  • Friday – Nothing

SPR Whiff

Global Energy Markets brush aside the SPR release; move higher.  The coordinated SPR release between the US, India, and UK landed in energy markets with a thud.  Within the global markets, SPR volumes are a relative thimble full of volume and not realistically able to influence pricing. Additionally the point of the SPR release was to lower gas prices. The problem in that thinking is that US refiners do not use the oil grade the US typically produces. They prefer a heavier feedstock which is cheaper to crack into the component parts.  As the SPR release was announced, gasoline and other refined product prices rose. Global markets also rallied after a nearly 10% decline in the prior 2 weeks. In a more bizarre twist, the US Administration wants more oil production yet at the same time attacked producers / refiners over price gouging.  Strange.

  • Now all eyes turn to the OPEC+ meeting set for Dec 2.  The expectation is that they hold the line on production. 

Today is loaded with Macro Data Points

  • Durable Goods; GDP; Jobless Claims; Intl Trade; New Home Sales; oil & NatGas Inv.; Personal Income; Consumer Sentiment; NatGas Inv.; FOMC Minutes at 2pm
    • Lots of data points, many of which could be market movers ahead of the holiday.
    • Pay attention to the FOMC Minutes at 2pm;  THis is usually a sleeper but with the FOMC in the midst of a policy shift, there may be nuances in the minutes that might be meaningful
  • Holiday Prep:   
    • There is a full day of trading today, but then a half day session Friday. 
    • Please review your positions for tickers expiring Friday and / or positions you do not want to hold over the 4 day weekend.
    • Watch the price action carefully between 2-4pm today for risk appetite heading into a long weekend. 
      • My usual preference is to be relatively light on active positions over the holiday to take advantage of the downtime to recharge.
  • Earnings from Yesterday:
    • Positive Reactions: DLTR, BURL, DELL
    • Negative Reactions:   BBY, GPS, JWN, ANF, DKS, ADSK
    • Most retailers from yesterday saw bearish reactions. Check the charts. Some big gaps that should be marked. Also good candidates for Bracket trades.
  • Bond Markets
    • Yields backed off a little yesterday but the trend remains higher and is keeping the pressure on high-valuation tech names.
    • The 7 year bond note auction went better than expected which took the immediate pressure off rates.
  • Seasonal tailwinds favor a year-end melt up.   November – December is typically 2 of the strongest months on the calendar
  • TSLA as lynchpin. 
    • Continue to focus on TSLA for risk sentiment clues as the company lies at the intersection of speculation and cap-weighted tech names.
    •  Yesterday Musk is reported to have sold another $1B of stock bringing his total to $10B.  It is hard for any stock to go up when a big seller is selling into any pop at all.
    • Watch that $1000 psychological level. A big break and hold below may signal a risk-off more broadly.
    • High Valuation names are struggling as traders preferring tried and true names with solid earnings support.
    • We discussed the ARK Invest complex being weak despite a raging bull market in 2021. IMO this will be the first area of market to have a major breakdown is there is one.
    • Watch as a canary, even if you don’t trade it
  • Small Caps ( IWM ) are currently below it’s breakout level of $233.
      • Price held the 50ema at $230.50.  It’s gotta hold here.  Nothing good will come of a move below the 50ema.
      • Job one is to recapture $233.  Anything short of that will keep IWM in a bearish longer-term posture.
      • IWM should be watched for risk sentiment as well.
        • A rising IWM usually signals a broader risk-on sentiment.
  • BOTTOM LINE:
    • Not a time to panic, but close attention to downside levels is warranted.
    • Watch yesterday’s lows.  A break below would likely usher in a wave of selling into the holiday weekend. 
    • Bearish divergences have been warning for a while of a potential reversal
    • We need to see if the dipsters pile in and where.
    • Be careful trying to bottom tick names.
    • I think high-valuation / Ponzi names are going to be challenged into year’s end as investors migrate to higher quality names with solid earnings support. 

Market Insights

We aren’t the only one’s focused on TSLA

 

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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