Hi all,

On Thursday we got the CPI data that showed a 0.1% drop versus an expected 0.1% gain. The markets dropped but there was a lot more going on with market internals. While the big tech names dragged the market lower on the news, internals were strong with more stocks advancing versus declining. This reflected a rotation of capital versus an all-out “sell the market”.  Money flowed to the small caps as interest rates dropped.

On Friday, the PPI data was higher at +0.2% versus the 0.1% expected. A bit of money flowed back into the high-tech sector making back some of the prior day losses. 

Based on this week's data, the CME fed watch tool has a 90% chance of a September rate cut. The economy seems to be still growing, the labor market is still solid, and inflation is trending in the direction the Fed wants. This has investors and traders generally optimistic about a continued move higher.

Let’s see if the earnings season results can keep this market supported and even moving higher.

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Sectors in Play Last Week

• Real Estate and Utilities were the biggest gaining sectors this week.
• Energy and Communication Services were down this week.

Key Levels for this Week

• DOW (40,000) – support 39,500 and resistance 40,250
• QQQ (495) – support 480 and resistance 503
• SPY (560) – support 545 and resistance 565
• IWM (213) – support 209 and resistance 220

What to Watch for this Week

• Monday – 8:30 Empire State; 12:00 Fed Powell speaks 
• Tuesday – 8:30 Retail sales, Import prices; 10:00 Business Inventories
• Wednesday – 8:30 Housing starts; 9:15 Industrial production; 2:00 Beige book.
• Thursday –8:30 Jobless claims; 10:00 Leading Indicators
• Friday – nothing

Earnings this week

• Monday – GS, BLK pre
• Tues – UNH, BAC pre and IBKR post
• Wed – ASML, JNJ, USB pre and LVS, UAL, AA post
• Thurs – NVS, TSM pre, and NFLX post
• Friday – AXP, SLB, HAL pre

Positions and Trades Last Week

• NVDA – sold.
• BA – short $260 call position. 
• CZR – sold.
• GDX – long.
• TNA – long small caps.
• TLT – New position - short Sept $91 puts. 
• XLE – long.

Tracking for Potential Trades

• AAPL – Now $220 and $225 are areas of support. Selling puts there if you don’t mind owning it at that level or keeping the premium if it does not get back to that level. Stock remains strong.
• BA – trading range between $175 and $195. Good for an options trade to sell puts and calls at those levels and collect the premium.
• META – has pulled back into an area where it should see support at $485.
• NFLX - has pulled back into an area where it should see support at $640.
• NVDA – $120 could be a good long entry on a little more profit-taking or sell puts there if you do not mind being forced into a long position at that level.

 

Note: These are investments I am in or watching however, they may not be suitable for all investors. The author of this email is NOT an investment advisory service, a registered investment advisor, or a broker-dealer and I do NOT undertake to advise clients or recipients of this email on which securities they should buy or sell for themselves. This email is provided for information purposes only and traders should always consult with their licensed financial and tax advisors to determine the suitability of any investment.