Daily Plan 11.15.23
Another session with drubbing for the recent bears. We opened above 4450, around 4470 and the traded up to 4500 shortly afterwards.
The related markets came in quite a bit hot, keeping a constant bid under emini S&P500 throughout the cash session. There really was very little resistance offered at 4500, which was a key weekly level as we closed the day near 4520.
With this close, we are now 10% above that 4130 level which I shared as bullish support. This 10% move I think is one of the fastest grind up, in some part fueled by short squeeze and bearish sentiment.
Some of the recent calls by me in this Substack had great time as well. In particular the below stocks have done really very very well in last 3 weeks or so:
META
GOOG
AAPL
AMD
SMCI
PLTR
TLT
ROKU
SNAP
NVDA
And of-course my bullish call on the main index itself.
Almost all of these shared as bullish bias in last few weeks.
The million dollar question now is, what’s next for the bears?
From a context and Econ data point of view, there is not much. Atleast when you look at it from the surface.
An ongoing hot CPI could have been a theme to be relied on by the bears but that story also crumbled today. So what is left?
Let us talk about the CPI for a second. The way this CPI is calculated is not very scientific and there is a generous heaping of hedonic and surveys to construct it.
For instance, the CPI may be built using a survey of folks asking them how they “feel” about where the rent will be in next few months.
Or use the data from car sales for example. However, it does not take into account the non tangible factors like what is the total payment on that car, when you add up the cost of interest as well as cost of insurance etc.
In owners’ equivalent rent, the total cost of homeownership which may include the maintenance, insurance etc is not considered, atleast not in a scientific and accurate manner.
In short, the real CPI may be much much higher than the official 3% or so.
This way of calculating the CPI served those in-charge well when the headline CPI was 9% and it was making news. It gave a perception that the CPI is lower than what is being reported.
But now it presents a dilemma. If the cooked up CPI is 3% and the real cost of living may be quite a bit higher, what do you really do with the cooked up CPI? Do you celebrate it? Do you do something with it, like cut rates? And if you cut rates based on this number, what does it do to the real cost of living? Will that not explode even higher?
So these are few questions that the FED and those in-charge will need to address in months to come.
As far as the bears go, I will again go back to my weekly plan- as a bear, I need to snatch some territory from the bulls. I need to take back some of the key levels back from the bulls. What are those?
I think 4450 could be a start.
Price action can act as a signaling system for rest of the market participants which in turn can turn the momentum on or off.
In this sense, after such a blockbuster number for the CPI, if the bears are able to take back 4450, this sends a strong message that something is not quite right in the bullish paradise.
Minus that, when you look at the mega caps, they alone have enough fire power to take this thing a bit higher still. The bottomline is, forget about the CPI, forget about the fundamentals, the bears desperately need to grab some ground away from the bulls and they are just not getting enough at the moment.
For day to day auction, I will lean on 4480 level for the session tomorrow.
Scenario 1: A test of 4480 may be supported for a retracements back to 4510-4512 level.
Scenario 2: If we are able to close on intraday time frame below 4480, I think we can retest 4450.
BABA
Unless you have been living under a rock, you know about Chinese Premier Xi’s visit to the US.
I have had a bullish bias to BABA from 80 level and the stock is now around 83. I do think if this holds this 80 level, we could see it retrace back up to 100+ area. I think this stock in long term bottoming process.
PYPL
With PayPal, I like the technical set up with the gap near 51 area. It is now near 55. I think if this holds this gap, we could see it float back up above 60 dollar area.
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! Toc
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