Trading the Charts for Monday, July 24th
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Good morning and Happy Monday,
We’re now getting into the heart of earnings season so be careful because many stocks are up big this year which has raised the bar on expectations and if they don’t do a “beat and raise” those stocks could get punished harshly. I’ve been trimming the past couple weeks and I might do a little more trimming the next couple days because I’m feeling a little bearish going into Q2 reports. I’m already up 100% YTD so it’s not the time to be taking excessive risks.
We also get the FOMC decision on Wednesday at 2pm EST with the Powell press conference at 2:30pm. Since the FOMC doesn’t meet in August I’m expecting the FOMC to raise rates by 25 bps and then sound overly hawkish in their prepared statement. I don’t need to raise cash going into the FOMC meeting because it’s a mid-day event but I will raise my stops on Wednesday in case Powell and his posse spark a selloff.
I believe the Dow has closed in the green for 8-10 straight days which is quite remarkable, especially while SPY and QQQ are pulling back. SPY is still above the 5d ema so no biggie whereas QQQ pulled back to the 14d ema on Friday after disappointing reports last week from TSLA, NFLX, ASML and TSM.
Futures slightly in the green this morning…
Yields down slightly this morning, 10Y at 3.8% which is slightly higher than a week ago when we were at 3.75%
SPY pulling back to the 5d ema the past couple days but still holding up well.
RSP also pulling back to the 5d ema the past couple days and also still holding up well.
QQQ is going through a bigger correction fueled by the disappointing earnings reports last week from TSLA, NFLX, TSM, and ASML. QQQ did find support at the 10d sma on Thursday and 14d ema on Friday. If earnings are slightly disappointing this week we’ll see QQQ pullback to the 21/23d ema, if they are more disappointing than we’ll probably test the 50d ema/sma which is 4.7% below Friday’s closing price.
QQQE looking better than QQQ, finding support at the 8d ema on Thursday and 6d ema on Friday. QQQE also finding support around the highs from last February/March.
IWM with a small pullback the past couple days, finding support at the 6d ema.
IWO looking a little worse than IWM (growth getting hit harder than value the past couple days), finding support at the 7d ema on Thursday and 8d ema on Friday as well as the highs from last August.
ARKK getting pounded the past couple days because of their heavy exposure to TSLA and other tech/growth stocks. Just like QQQ, ARKK also finding support at the 14d ema on Friday.
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