Hi all,

CPI and PPI data released on Wed and Thursday respectively gave the market some hope that inflation is starting to come down and rate cuts later this year are still a possibility. In response to the data, yields on the treasury bills dropped significantly this week.

Consumer sentiment numbers that came out Friday showed a dramatic drop as people seem to be feeling less optimistic about the economy overall despite record highs in the markets and very low unemployment by historical standards.

Overall, market internals look very weak with most of the old Magnificent 7 carrying the markets to new highs. At the same time, on a high-level view, declining stocks outnumber advancing stocks by 3 to 1 and there were 85% new lows versus 15% new highs. This shows how much a few big names dominate index action and likely explains why QQQ is up this week and the IWM is down and continues to struggle. Price action in energy and transport are also possibly foretelling a weakening economy. 

I think we continue to see a few of the big-name stocks perform well while we continue to see weakness in much of the rest of the market. 

Recap Video

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Sectors in Play Last Week

• Technology and Real Estate were the biggest gaining sectors this week.
• Energy and Financials were the two sectors down the most this week.

Key Levels for this Week

• DOW (38,590) – support 38,100 and resistance 39,100
• QQQ (479) – support 460 and resistance 500
• SPY (543) – support 530 and resistance 550
• IWM (199) – support 195 and resistance 205

What to Watch for this Week

• Monday – nothing
• Tuesday – 8:30 Retail sales; 9:15 Industrial and Manufacturing Production
• Wednesday – Holiday
• Thursday –8:30 Jobless claims; Building Permits and Housing starts
• Friday – 9:45 Global PMI data Import price index; 10:00 Home sales

Earnings this week

• Monday – LEN post (4:30)
• Tues – KB post (4:10)
• Wed – holiday
• Thurs – DRI, ACN, KR pre
• Friday – KMX pre

Positions and Trades Last Week

• BA – short $260 call position. 
• CZR – sold.
• CRM – sold after failing at 9 ema daily moving average.
• AMZN -sold.
• NFLX - Option trade Friday (0DTE), sold $680 calls expired worthless and kept premium.
• TLT – short a few $91 puts. Remainder expired this week – kept premium.

Tracking for Potential Trades

• AAPL – broke out last week after the developer’s conference announcements regarding AI initiatives. Big run up now – might pullback to $210 range but overall looks bullish.
• Bitcoin – struggling to break out. A further pullback on IBIT to $35 would be a good risk-to-reward entry price.
• BROS – possible support here at $37 – 20 ema on the daily chart.
• XLY – consumers are in a bad mood so discretionary stocks will likely struggle to go higher for now. Possible short.
• EXPE – look for gap fill to $130 but see comments above about XLY – consumer mood might spill over into the travel sector.
• NFLX – nice breakout of a trading range Friday. Could be heading back to an all-time high of $700 ish.
• XLK – tech strong but very extended. The pullback is overdue but the overall trend is higher.

 

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.