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Our View
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This week the banks report earnings, with JPMorgan, Citi, Wells Fargo, PNC and BlackRock due up on Friday morning. Of everything I read, I would say that the general earning forecast is for weak earnings. My guess is several of the big US banks will warn about future earnings.
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Earnings Whispers @eWhispers |
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| Replying to@eWhispers |
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Noticeably absent from this calendar is $FRC, which is normally among the early Banks to report. However, they typically tell us two weeks in advance when they report results and this time they have been quiet. Maybe they’ll still report this week, but probably not, and that is… https://t.co/RbFihP2VxD https://t.co/QWJ1XlTh4n
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Apr 7, 2023
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57 Likes 9 Retweets 1 Replies
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It’s worth mentioning that another facet of the bank failures will cause a wave of bank mergers. AKA, the big ones gobbling up the little ones.
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Everything is shifting. Some of America’s most successful firms — like McDonalds — are laying off people and closing offices. The other day, Blackstone sold two office towers in Santa Ana at a 36% loss. These were bought in 2024 and were considered class A properties. It raises a question mark about B and C-rated properties.
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Last week I posted about the recent gains in the S&P, noting that 40% of the gains came from two stocks: MSFT and AAPL. 90% of the gains come from just 20 stocks.
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You guys know I hate writing this stuff, I really do. But it’s the reality of our world right now. In my mind, when you combine the current economic and stock environment, this goes to show how narrow the rally really is and I think it’s unsustainable.
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Our Lean
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Despite all the realities of the world, the low volume continues to work in the favor of the upside.
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Based on Friday’s close, I think we see higher prices. Note: We have been talking about higher prices for two weeks now. This is separating the noise/news/reality from price action and the trend. As traders, we should know what’s going on, but continue to trade what’s in front of us.
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Our Lean
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I don’t think the crowds I saw in Delray over the weekend will be back to work for at least a few days, if not the entire week. Buying the ES if it’s down 10 points on the day would be a great entry point and down 15 to 20 would be a high probability trade.
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As for levels, watch 4142.50 on the upside, followed by 4158-60 and 4172-75.
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On the downside, watch 4095-4100 and 4076.
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Technical Edge —
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One explanation for the current rally? The expected drop in interest rates. While the market still expects a 25 basis point increase from the Fed in early May, estimates call for rates to fall 50 basis points from current levels at year-end (or down 75 basis points from May’s expected hike).
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A month ago, the consensus estimates were for rates to be 50 basis points higher than current levels at year-end. So this reversal in expectations has likely helped fuel a bit of the recent rally, even if the catalysts behind the rates cuts are not good.
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One caveat: Wednesday’s CPI report could move the needle.
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December Rate-Hike Odds
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S&P 500 — ES
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4135 held as resistance on Friday and it’s now the two-day high. Above it keeps the March high in play. Below could put more pressure on the ES into a key zone.
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Key pivot: 4135
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Upside Levels: 4142.50 (March high), 4158-60, 4172-75
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Downside levels: 4095-4100 (that’s the 10-day ema and two-day low), 4076, 4060-65
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SPY
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Upside Levels (SPY): $409.70-ish (March high & Thursday’s high). $412, $414.50 to $415
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Downside Levels (SPY): $405.50 to $406 & 10-day ema, $402 to $403
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SPX
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Upside Levels (SPY): 4107-10, 4120, 4133, 4150
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Downside Levels (SPY): 4070-75, 4050, 4025-4030
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NQ & QQQ
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Okay! We got the setup we were looking for on the long side, and then follow-through up to 13,150+ and $317.50+
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Tech continues to steer the ship and the recent trades in the Nasdaq show just that.
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For the QQQ, the line in the sand is $321 to clear. For the NQ, it’s 13,300. B/E stops or raised stops for anyone still long some of these.
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AAPL
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How many times can we try to drink from the same well? Inside-and-daily-up rotation in AAPL is possible if we open below $165 and rotate up through this area. I like a ½ sized position, given the run we’ve had.
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I prefer a 15-min close above this level at least, but if we get it, last week’s highs near $167 could be in play.
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AAPL holds the 10-day nicely.
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Stop can be at $161.50 initially, if the setup triggers.
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FSLR
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Not quite sure how I want to play this one yet. However, I do like the idea of buying a dip down to the $195 area, where FSLR finds a recent support level and the 10-week moving average.
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Another idea would be a test of this area, followed by a regain of last week’s low near $200 to get us long with a defined low.
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Aggressive bulls can consider the first option, conservative bulls can consider the latter.
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Open Positions
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Bold are the trades with recent updates.
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Italics show means the trade is closed.
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Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)
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** = previous trade setup we are stalking.
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FSLR, NVDA, QQQ, AAPL, down to runners. Congrats, all. Great sequence!
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AAPL — for those that were swinging AAPL for the longer timeframe, we got our $165 area to trim into and as we continue to tip-toe higher, I’d say down to ½ size here or even less.
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Going for $168.50 to $170 on the next tranche. Raise stops up to $160.
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CRM — Tagged and held ~$194 and the 10-day — $197 to $198 is ideal first trim. I’d like to get $199-$200 to get down to ½ or less, but that’s asking for a lot if tech is tried.
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I am long calls instead of common, as it’s easier to manage the risk in this case. For those long common, you don’t want to see CRM break $192 to $192.50.
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** those not long can look for a daily-up move over $194.
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**AMD — watching Thursday’s setup (i.e. 10-week ema & $88.75-ish area).
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** GE — Watching for daily-up cover $94.50 with a 15- or 30-minute close above this mark. Stop could be tight at $93 or looser for more aggressive traders.
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Go-To Watchlist
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Feel free to build your own trades off these relative strength leaders
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Relative strength leaders → Tech remains absolutely the strongest group lately.
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NVDA, AMD
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TSCO
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MSFT, AAPL, META
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PANW, FTNT
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FSLR
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GE → love this name if we can get a test of the 10-week ema
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DKS, ULTA
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Economic Calendar
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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
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Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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