Tickers discussed: SPY QQQ IWM GLD GDX BX FB SEAS SIX Put / Call ratio
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.
Trader’s Couch – Changing your Self-talk
Self–talk is your internal dialogue. It’s influenced by your subconscious mind, and it reveals your thoughts, beliefs, questions, and ideas. Self–talk can be both negative and positive. It can be encouraging, and it can be distressing
Traders can be really harsh on themselves. The problem is that the brain listens and believes the things we say to ourselves. Negative self-talk can be a powerful destructive force in our trading and out lives in general. Whenever we call ourselves we are morons, idiots or losers after bad trades, it begins a reinforcing negative feedback loop where we begin to expect negative outcomes. We can reverse the whole thing by flipping the script to positive self talk where we learn from mistakes, talk positively to ourselves, and form a positive feedback loop.
A great way to start changing your self-talk is to talk to yourself as you would a student you are mentoring. If the student makes a mistake, how would you talk to them or coach them? Probably in a much kinder, more constructive way than you’d talk to yourself. It’s a big topic. Here are some reference materials that will help.
Find a nice article / Post on the topic of Self-talk HERE
A book I have had for 20 years is great. “What to say when you talk to yourself” Shad Helmstetter $12 on Amazon HERE
Earnings
Market Graphics
Tracking Robinhood Traders
1 week increases and decreases. Follow along at www.robintrack.net
Waiting for catalysts to play out
Trading has been choppy and is expected to remain so as whipsaws from Covid, Trade, and economic headlines jerk price around
Bullish Catalysts
- Sequential Improvement: When you are starting at almost zero, each economic report will show improvement. Because of the low base, econ data should show sequential improvement over the next few months. That should be equity bullish.
- Unlimited FED Support. Expect the Fed to step in with bazookas blazing if the market begins to tank. Massive downside scenarios will likely be mitigated.
- Fiscal Round 4: If Congress can muster an infrastructure program, extend covid benefits or other wise pass added stimulus, it will be well received.
Bearish Catalysts
- Covid Resurgence. AZ, CA, FL, NC, SC have record number of new cases with new hot spots emerging in other states. Some say cases don’t matter, only hospitalizations. I think municipalities will react to case count.
- Bank Stress Tests: Banks report stress tests this week. FED is adding a Covid layer to the tests. Banks failing the tests or if divvies are suspended to meet capital requirements would not be good. New loan loss provisions would be bearish as well. Of course, this could be bullish if all goes well .
- Biden Surge: If a Democratic sweep in November seems more likely, may be drag on market as Trump Tax cuts may be reversed in 2021.
- Liquidation Sales: Retailers are facing an onslaught of “going out of business” sales and other liquidations
- Fed Balance Sheet rate of change: After the initial surge, the rate of Fed balance sheet growth is slowing. How would you like it if your spendable income was decreasing each week? Market may not like the fact that excess liquidity is slowly being reduced. Last week, the balance sheet actually went down.
- Put – Call Ratio getting / has been at extremes. Sentiment Trader posted this factoid that has been highly publicized. It doesn’t matter till it does.
- Policy Fatigue: For whatever reason Covid benefits are allowed to roll off, that would be equity bearish.
- FED in Election Season: Historically the FED has not wanted to be very active leading into election season. Their resolve would be tested if market needs support but they do not react for fear of being charged with interfering in election politics. They may have an incentive to front run programs before September to avoid this.
- CPCE / CPCI divergence. Humble Student of the Markets points out that the Retail sensitive put / call ratio ( CPCE) is diverging greatly from the dealer focused Index put / call ratio (CPCI ) Historically this type of divergence resolves bearishly.
Relationships to Watch
- $USD : Weakening US Dollar should be equity positive. A rising Dollar has been a risk off / fear trade.
- Oil: Oil has been trading pretty much in lock step with equities. There is a gap to fill to $42 on the WTIC chart. Watch for a break above to help confirm re-opening reflation trade. A break back below $40 and further slide would show eroding confidence in the continued re-opening trade.
- Yields: Up is bullish; down is bearish.
The Oscillators – Weekly $NYSI and $NASI
These are summation indexes of the NYMO and NAMO we’ve been looking at on a regular basis. Notice they are both at the high end of the range. Tough to use these as pure timing signals but they are good to color and inform your positioning. The NASI looks particularly overdone but remember, these serve as yellow flags, not outright sell signals.
Charts in Focus
$FB Facebook
A move above $240 coupled with a bull cross on the PPO and RSI break above trend sends this higher and would offer a nice line at $240 to stay long against. Traders already long could move their stops up to just below $240 to protect embedded gains.
$BX – Blackstone
Asset manager Blackstone recently survived a 50ema test and has since reclaimed all the ema’s. A move above $59.50 into the gap likely fills to $61 with the possibility of tagging the recent high of $64
$SEAS – SeaWorld
Price is testing the low side of the channel / bear flag. Set an alarm at $15.50 / $15 to get short on a break. Looking for $13 as a T1. If you are bullish here is the spot to step in w/ a tight stop. Given RSI has broken trend and dipped below 50 and PPO already having put in a bear cross, I favor lower.
$SIX – Six Flags
Another theme park. Its possible that as Covid cases surge, it is taking the air out of these theme park stocks. On Friday, price closed below it’s 50ema and all of the other ema’s as well. It’s also dropped out of the channel / bear flag. While price is below $22, I think it can find $17 as T1. If the market weakens or Covid spikes more, March lows are not unrealistic an expectation if $17 breaks.
$GLD – Gold
Gold needs to pop this consolidation above $164.25 to get it going. The measured move on a breakout is $170. With price above all the ema’s chances are good. Jump on this or the miners on a break out. Set alarms.
$GDX – Gold Miners
After a 6 week consolidation, this looks ready to pop as the PPO resets at the zero line, RSI has a trend line breakout primed and price closes above all the ema’s and trying to take out the downtrend line . I am in GDX JUL 34 Calls. Ready for this to go.
Index Charts
$SPX Broadening Top
$SPY Weekly
SPY Daily
$QQQ Weekly
QQQ Daily
$IWM Weekly
$IWM Daily
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