Tickers discussed: SPY QQQ IWM All SPDR Sector Charts Strategy & Tactics
The Weekend Profit Navigator provides a big picture stock market analysis for the week just past with a look ahead. Key levels and trading locations for the indexes are provided, along with trading plans and timely commentary to keep you on the right side of the trade.
A Lesson on Practical Politics
excerpt from “The Gods Themselves” Asimov 1972
Politics caters to human nature and neither politics nor human nature has changed much in the 50 years since this was written. We see proof of it in the “politics of pumping” going on today. It’s also the reason we can look back at market events occurring 50 or 100 years ago a draw wisdom from them. Market behavior, at it’s core, is driven by human nature’s base instincts. I don’t think that is changing anytime soon.
A massive week for earnings where over 25% of the market cap of the indexes will be reporting. This is only the 3rd time all the FAAMG names report in the same week. Tuesday : GOOGL AMC Wednesday: FB and MSFT AMC THursday : AAPL and AMZN both AMC Remember, its not the report that counts, its the REACTION to the report that we are interested in.
Moment of Truth
“Moment of Truth” is of course an overstatement for the coming week. There is always another day, week or month in the markets so any one week isn’t the be all or end all. That said, with all five of the FAAMG names reporting this week, we can confidently say it is an important week for the markets. These 5 names comprise 23% or more of the market. The highest level EVER. Higher than even the dot com bubble. It will be interesting to see how market participants handle the almost guaranteed drop in ad spend for GOOGL and FB this past quarter and into the near future. Does AAPL expect a rapid uptake in $1000 phones once the economy opens up? Does MSFT anticipate enterprise spending to roll on un-phased by the slow down? Has AMZN seen any margin compression during this past quarter or any issues going forward? I posted earlier that in the GFC 1 that AAPL AMZN and MSFT all lost 60% of their value. I’ve also posted many times that until / unless these market leaders breakdown the bears have a problem. It’s a mathematical impossibility for the broad averages SPY / QQQ to go down much if these “Generals” don’t get clipped. We should get an idea this week how the near-term will play out.
Strategy and Positioning
As you will see there are a lot of bullish looking charts out there. Price has been consolidating at the top of the range in the past 2 weeks. So we are at an inflection point. If the reaction to the FAAMG earnings this week is positive, I’d expect price to pop resistance and the advance to continue. If the response is negative, there will be a pull back simply because of the extreme cap weighting of these stocks. I am almost all cash except for long exposure in gold and gold miners. The first eighth is an expensive eighth to catch so I am fine waiting to see if the advance continues or a reversal is afoot. I am happy giving up that eighth and hopping on once the direction is clearer. It’s anyone’s game here.
The Oscillators; At the high end of the range but not over-cooked
The sell off on Monday and Tuesday burned off the over-bought conditions. By the end of the week the oscillators recovered but are not over-bought. There is room for further upside After burning off the extremes early last week, both $NYMO and $NAMO are again running hot. For me this is a “step to the sidelines ” moment for all but tactical, ultra short term trades. Just not willing to hols swing longs from these levels in the oscillators. While in and of themselves are not sell signals, they do say risk is tilted to the downside.
SPDR Sector Review
Pay attention to the relative price performance of each sector that I’ve included in the lower panel of the charts.
$SPX Broadening Top
Price moved higher as it approaches a multiple convergence area of resistances. 61.8% fib level, Weekly Pivot point and the 40 week ema. That convergence will be tough to punch through.
Follow the chart annotations for specific levels and commentary.
Get inspired, empowered and prepared. Join us!
As the host of Trader’s Profit Compass, I work hard to inspire, empower, and prepare aspiring traders to face the markets with fortitude, quiet confidence and inner calm. It’s a protein-rich, sugar free environment without ego or judgement. While I can’t promise that joining our group will change your life, I’d like to think it will help your trading. Give it a spin! Nothing to lose and potentially much to gain.
Our group of aspiring traders are into active swing trading using technical analysis to find objective, high-probability, low-risk trades. Using these processes we’ve been fortunate to be winning; not perfect but winning. If that is appealing to you, join us! I’d like to think you’d benefit from the work. You’ll get premium content 6 times a week including a copy of my Daily Profit Compass, Weekend Profit Navigator,along with other actionable content delivered directly to your mailbox. You’ll even get an invite to our new trading room on SLACK.
Registration is simple and FREE Visit our homepage HERE