Daily Plan 6/23/23
Folks -
With about a couple of hours left to close the session, as I begin drafting this, I see yet another day when the market has been pretty much capped in between the two levels shared by me earlier. This of course can and will change at some point, but the levels have been fairly spot-on at the time of this post.
Overall tone of the market was a bouncy tech with buyers stepping in at 15000 NQ, liking the Powell remarks. From an event catalyst perspective, there is not much going on tomorrow. However, at time of this post, neither NQ nor ES were able to take the resistance levels out shared last night. If these levels hold tomorrow as well, the market would not have made it either above or below my weekly levels shared last week.
The key highlights of the day today were the Bank of England Presser and remarks from Powell.
First let me describe Powell’s response to questions from LA Senator Kennedy.
When asked by the Senator what effect will a 10% rise or a 10% reduction in spend by the US Federal government have on inflation, Powell replied that an increase in fiscal spend will stimulate the economy by increasing demand and will have no meaningful impact on inflation. He further stated that a decrease in spending will also again have a minuscule impact on inflation whereas it will have a larger impact on demand destruction.
What made it even more incoherent and inconsistent was Powell stating just a few moments earlier that the FEDERAL spend is on an unsustainable path.
So which Powell to believe? Or are both out of touch and inconsistent with what the path ahead needs to be?
Powell was not the only powerful Central Banker out of touch with every day citizens. In fact he was not the worst offender.
That award goes to the BOE Governor Andrew Bailey who was forced to raise interest rates by 50 BPS as mentioned in my newsletter last night.
So evident was his disdain with the common folks, the general public that he could not quite hide it by blaming the decades high inflation in the UK on ‘unsustainable’ wage demands by the wage earners. No, it is not the Central Bank policies or even a recognition that these policies may be wreaking havoc on prices - but instead it must be the average person who is now demanding insane, unsustainable wages for a full day’s work. This is how out of touch these Central Bankers are, who are supposedly responsible to influence and guide these multi trillion-dollar economies. Bailey was wholeheartedly supported by that country’s Prime Minister and was lauded as doing the right thing.
Let a couple of friendly banks fail or as much as even hint at a failure and Bailey will not hesitate to materialize 2-3 trillion pounds out of thin air within hours- inflation be damned!
But I am pretty sure these guys have it under control and everything will just work out- as it should ;)
These wage and labor questions will need to be addressed by this market pretty soon. Let us assume for sake of this exercise that the current admin is friendly for the working class. With that being the case, and with the election Primary season in the US less than a year away, my top questions will be a) what is the tolerance level for extensive joblessness in an election year? b) job losses, once the initial 2020 crisis over hiring fluff is ironed away, will impact those on the lower wage scale more than others. What is the appetite for 6-7% or more unemployment rate in those demographics? c) and if A and B are not going to be acceptable, what political pressures will the Central Bankers come under to tone down the fight against inflation and where does it put inflation and FED funds rate in next year?
On another note, TSLA did not get reprieve overnight once it started selling off from that Weekly Level I had shared on Sunday night.
Overnight it sold down to my weekly level and that is where it stopped hemorrhaging and instead turned green at time of this post.
Very good action in TSLA this week.
The highlight of the day in Russel for today was also the Overstock stock OSTK.
They were able to purchase the BBBY label for a paltry 21 million dollars or so at an auction since the company went bust.
This company at its prime was worth almost 20 billion dollars. Today it sold at an auction for 20 million! At almost a 99.99% discount. Even in 2020-2021 madness, this was a 2-billion-dollar company. I think OSTK got a very sweet deal - it is another thing that no one who I know really buys anything at OSTK but it remains to be seen if this Acquistion changes that. These type of things take time to materialize and I would say Overstock’s fortunes could change in a year or two if this is going to work. I mean it is up 25% today. I think if we did dip into 18-19 area, I could probably see some support come in.
Dollar General also looks to have regained some of its lost mojo earlier. It is near 172 now.
I think if this thing holds 166-167, it may want to fill some of those gaps near 190.
MARA stock was down quite a bit today to trade near 11 and change. Note my call earlier about Bitcoin where I was bullish expecting Bitcoin to trade higher a couple of weeks ago.
With MARA, I think if this 10.5-11 area holds, we could see 15 area retested. Bitcoin due to some factors I will share over the weekend, from the levels that I shared last night make me reluctant to be bearish on this as long as it remains above that key level shared by me in the nightly newsletter.
My levels for tomorrow
My key level for tomorrow remains 4430.
Scenario 1: I would like to see an upside break of 4430 to may be expect a test of 4455 area again.
Scenario 2: if we remain offered below 4430, we may test the 4390 area again.
Below 4390, next support could be at 4365-4371.
~ Tic
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