Weekend Profit Navigator July 25

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Tickers discussed: SPY QQQ IWM $COPPER SLX  $TNX TLT $CRB Covid FEAR, Market Sentiment

The Weekend Profit Navigator is a technical look at markets for active traders on the Daily and Weekly time frames.  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 

Massive week ahead with everything on the line for QQQ and SPY as all of mega-cap Tech reports.  If the earnings reaction is positive, we go higher. If they dump these names we go lower. It’s just math………..the FATMAAN names are 40% of QQQ and 25 % of SPY

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 to reduce run time.

Find the Video  HERE

 

Macro Data Releases Week of July 26

  • Monday – New Home Sales; Dallas FED,  3mo, 6mo and 2yr bond auctions
  • Tuesday – Durable Goods, Case-Shiller, Consumer Confidence, Richmond Fed, FOMC meeting starts, 5yr auction
  • Wednesday – International Trade Numbers, Retail / Wholesale inventories, Oil inventory; FOMC Announcement 2pm, JPOW presser 2.30pm
  • Thursday – GDP, Jobless Claims, Pending Home sales, EIA NatGas Inventories,   7 yr Bond Auction
  • Friday – Employment Cost Index, Personal Income, FOMC Bullard at 9am, Chicago PMI 9.30am, Consumer Sentiment 10am

Cognitive Dissonance

Definition: The state of having inconsistent thoughts, beliefs, or attitudes, especially related to behavioral decisions.

Example 1:  Market Averages vs Average Stock Performance

SPY and QQQ are at all-time highs yet 60% of stocks are below their 50ema.  Do FAAMG stocks catch down or do average stocks catch up?

Example 2:  Stock Indexes at All-time Highs vs  Fearful Sentiment

What happens if the masses actually get bullish?  Can the market go down materially if sentiment is already bearish?

Example 3:  Covid Delta Variant Fears Vs Economic Reality

Not 15 min can go by on both financial or main stream media driving Delta Variant fears yet high-frequency economic data show surging activity indicating no change in behavior or immediate threat to the economic recovery.   The data is compelling; Fade the Covid FEAR.     Charts from Cam Hui / Callum Thomas

Apple Mobility tracking data shows positive trend and no “Delta Rollover”

TSA Travel numbers closing on 2019 numbers and have not rolled over

Movie going trends are headed in the right direction

Similar charts could be shown for Hotel occupancy, Gasoline demand, and restaurant reservations. America is on the move. Could this all change in 2 weeks ?   Sure.   But for now, there isnt much evidence that Covid Variant fears are changing people’s behavior.

Example 4: Bond Yields cratering vs Inflation Ripping

The massive fiscal and monetary impulse combined with pent up demand coming out of covid lock down has consumer prices ripping. You’d think bond prices would be driving higher. Instead they have been falling since the April high of 1.75%.

Example 5:  Surging Commodity Prices vs  Dogging Commodity Equity Prices

The CRB Commodity tracking index is attacking 6 year highs.  Oil is trading at / near the recent highs yet XOP and XLE are lower, not higher. Ditto Copper / Copper miners and the same for Steel.

There is a lot of pain and frustration out there in trading and investing land not only for retail but hedge funds as well.  The past 2 months have been hell for anyone who’s been diversified  and / or who’s been caught in these sick sector rotations fueled by the insane bond rate moves.

Key Market Thoughts

  • Falling Rates are still in control; Use the TLT uptrend line as a pivot level
  • This environment favors tech with FATMAAN leading the way
  • This week carries a ton of risk in both directions.  JPOW +  All of FATMAAN reporting could result in either a moonshot or a rug pull of epic proportions
  • Further weakness in China Tech may spur additional money flows into FATMAAN and be a stabilizing force.

Regime Shift?

Rising Rate Environment Areas of Interest.

  • Cyclically focuses ETF’s to watch.:  XLB, XLE, XLF, XLI, KRE, IWM
  • Materials.  Commodity and Specialty Chemicals
  • Metals and Mining.  Copper, Aluminum, Steel, XME
  • Industrials. HON / MMM / GE  Infrastructure names
  • JETS / Airlines, Delivery services , marine transport, etc
  • KRE; Regional Banks…………more highly levered to rates than mega banks
  • Travels, Hotels, Cruise Lines re-opening names.

FATMAAN Earnings

July 26: TSLA       July 27: AAPL / GOOGL / MSFT      July 28: FB      July 29 AMZN    All earnings after the bell

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 Daily

QQQ Daily

IWM Daily

 

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