Before the Bell Oct 14

Tickers discussed: SPY QQQ IWM FB AAPL TSLA MSFT  AMZN  GOOGL NFLX  SMH  NIO XPEV $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.

Earnings 

Companion Video  ( Will return tomorrow )

The ESG ( Energy Stops Growing )  Cascade and Green Transition

Looks like governments around the world are poised to force a transition to green and spiking costs be damned.

Here are the big trends I see

  • Hydro-carbon prices going higher and likely will stay there.
    • Why? Capex starvation and ESG banning investment in dirty hydrocarbons
    • Coal, NatGas, Oil all going higher.  IMO, nothing would delight the Global Climate Crowd more than $125 oil and $20 NatGas as they would use it to justify and even faster transition to Green Energy
  • Alternative fuels higher – Uranium
    • Sprott just started an Uranium Trust that is vacuuming up spare capacity which will, over time, keep a bid under Uranium
    • After a 40 year war on Nuclear, the Green Party in Finland capitulates and is now Pro-Nuclear and will lobby the EU to do the same
  • Solar -& Wind
    • Watching closely.  When do we find out that governments require solar be installed on all new construction?
    • Oct 13:  Sector makes a power move higher and many issues have broken downtrend resistance
  • Commodities
    • The world is too small to supply all the inputs required for the green transformation
    • Copper, Aluminum, Lithium, Steel……….literally there are or will be structural deficits across the board.
  • EV Cars
    • When do we get the time-line for the phase out of gas-powered cars?
      • I’m not talking about a goal; I am talking about laws banning the production and sale of gas-powered cars.
      • CA just banned gas-powered lawn mowers and leaf blowers
    • Watch EV car space. THere will be winners and losers
    • Government subsidies will support the industry

Order Flow Insights

I notice a sharp increase in option order flow in EV makers XPEV and NIO.  What I like is that there are some nice orders out in time which shows more commitment that a bunch of cheap shots for Friday.

$COPPER Breaks out

After a 4-5 month consolidation, copper is now making a power move and breaking out. Not seen here is the fact that physical inventory of copper has dropped about 40% over the past few months.  I think copper is setting up for a breakout in Q4 that will take out the prior high.  Stocks to Trade include FCX / TECK / SCCO / CPER / COPX

 

 

Will today be the day?

Morning futures look good as we head to the open and October OPEX tomorrow. I think the key for SPY and QQQ is the 50ema as we’ve been discussing. If those indexes can recapture the 50ema the bulls will be on much firmer ground. The next objective would be to close the first overhead gap.  Both of these levels will be tough nuts to crack. Recently, the faders have been active at overhead resistance so the bulls will need to prove it by powering through.  In my opinion, I think IWM is set up the best and I expect IWM to outperform in Q4 as covid backs off and the real economy picks up.  Note that IWM is already above the 50ema so there is much less OH resistance here than on the other indexes.  Along those same lines, I think bubble and high-valuation tech stocks will have a hard time in Q4 as rates push higher.   Watch the FATMAAN names closely.  They are after all the market representing 40% of QQQ and 25% of SPY.

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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