Daily Plan 12/22/22
Collapse!
Folks-
Scenario 1 was at play at the open. We opened above 3870, pulled back around 3870 and then rallied to 3890. There was strong momentum at the open and we did not even spend little time of 3890. In a hurry to take off!
We traded up to 3910- this is where I thought that there will be some resistance coming into play. This level did manage to stop the advance but the auction pretty much died off after that first hour and a half. Extremely dull day for rest of the session to close the day near 3910. Yesterday’s session I thought was much more tradable than today with lot more action - both up and down. I am not a big fan of these day types.
A lot of this is expected - there is not much trading volume at the moment with a few more days to go for the holiday break. Most of the tone of the day today was set up by Nike’s guidance about inventory levels going down which caused a large 12% surge in that stock.
This also pulled stocks like AAPL from the lows made yesterday- I personally think a lot of upbeat tone in Nike’s beat and guidance is stemming from the consumer taking on more and more credit card debt. The credit card debt is growing by double digits year over year - this is not going to be sustainable, especially as the credit card rates also go up.
We also had quite a collapse in the VIX today which sold off by about 7% lifting the risk assets like the Spooz. Seasonally this is expected as volatility comes to a grind in these last few days of the trading for the year.
From a news flow tomorrow, we have the GDP out about an hour before the cash session open and other than that there is not much planned risk until Friday, when we have the PCE index.
Scenario 1: I think for the bulls to make more headway here, they will need to close above 3920 within the IB period to target 3940/3950. Scenario 2: I think if we remain offered or open below 3920, this could lead to a test of 3890. An intraday close below 3890 could get a trend day going on the downside. We are now trading around 3910. Little bit longer term than intraday levels, I do like to see a test of 3800 again in the cash session. 3800 I think is a key level and it trading within the cash session could provide key clues going forward. To zoom out a bit, on the weekly time frames, we are still within the 2 weekly levels, having seen the 3800 bid up but bid up in the Globex and not the cash session.
When you look at the internet experts and the finance gurus (furu), you are still seeing a lot of optimism which I do not understand why. The fundamental conditions for many are deteriorating by the day- this is the same group of people who were very bullish on names like TSLA at 330 when we were calling for a test of 140 in this very blog!
Now these are same group of folks who are adamant that AAPL can not trade 120 , that the stock is oversold at 140 ! I will take these opinions with a grain of sale - given their track record so far this year. The macro situation is not getting better - it is getting worst. In this backdrop, I could warm up to an AAPL below 120 not above it!
The one silver lining and I think that is a wrong phrase to use in this context - that I see is the US Congress hell bent on another almost 2 trillion dollar spending bill! While this may be good for the stocks in the short term, this is not good for any one in the long term. I think this will light a fuse under inflation if passed and the stocks may rally due to this one more time - but they will soon run into the reality of higher inflation , lower growth for a long long time.
This is it from me for now. Stay nimble, stay safe.
On an admin side note, I have been with the folks and a little drawn out and not able to fully stay on top of the comments and replies - I have them temporarily turned off but should be back soon to the normal cadence.
~ Tic
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