Weekend Profit Navigator April 26

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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.

Earnings

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.

XLB Daily

XLC Daily

XLE Daily

XLF Daily

XLI Daily

XLK Daily

XLP Daily

XLU Daily

XLV Daily

XLY Daily

 

Equities

$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.

SPY Daily

Follow the chart annotations for specific levels and commentary.

 

$QQQ Daily

$IWM Daily

 

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