Daily Plan 6/30 '22
Month End Shenanigans
Traders-
Let us review some of the related markets first.
Starting with TLT…
TLT has another good day today and close above 113. This is potentially good.
Many of my readers know I think TLT is a leading indicator and my view is bonds may get stronger or weaker before the weakness or strength develops in the equities.
OIL
EIA data today showed one of the strongest increases in oil production. As a result oil and oil stocks eased off a bit. Read my newsletter from last night below for more thoughts on this topic.
Ultimately lower oil prices are potentially deflationary.
However, whatever little support TLT and lower oil prices may have given to the market, dollar took it all away. Dollar looks tremendously strong and cleared 105 today. This is an extremely extremely strong read on the US dollar adding pressure on all kind of related markets.
In my view the TLT rally in bonds and a rally in the dollar as well may be more of a sign that the folks are flocking to safety of US bonds than anything else. Now if TLT rallied and dollar came off, I may reconsider this view.
TSLA
TSLA could not fill the gap, it has sold off quite heavily from my 790 from last month and today’s low was around 666.
Other markets
In other news, CCL which I have been a big bear on since 20 and then again at 13 crashed today and lost over 15%. I had covered the macro headwinds facing this company in great detail in my letter. With the record debt they have, with fewer and fewer folks able to afford vacation and with record gas prices, I think this stock may find sellers on any rips, for example into 10.
PLTR has now lost about a dollar off its value as shared in my weekly newsletter below, click the link below.
My weekly plan also talks about the MU earnings which reports tomorrow. I was a bear on this stock at 60 recently and it has since dropped to 55.
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All levels and ideas shared by me are 100% based on tape and level 2 analysis and I do not have any bias in my analysis - I report the things as I see them. If you want an unbiased personal view of the markets, this is the place!
My thoughts on the S&P500 market
Today session was a mixed bag for me as I was personally not very focussed. Though my levels shared in this newsletter below were spot on, the session was extremely choppy for me.
I am hoping for a better session tomorrow.
Now know that what we are dealing with tomorrow - which may make trading a bit choppier, depending on where we open. More on that later.
Tomorrow is the PCE number. This is FED’s favorite tool to gauge the inflation. This comes out an hour before the open and may already set the stage for the day ahead.
If this was not enough, we have the month end and quarter end tomorrow. A lot of chop can happen very fast.
If this was not enough either, we are starting a long weekend on Friday but the reality is most folks will be signed off tomorrow late PM. So there is that.
Now, I was intrigued by the fact today that despite the revisions to the GDP lower and despite stronger correlated markets, the S&P500 could not even test my level from last night, let alone break it.
One reason I could think of was the adamance of the FED chair that he will do what it takes to rein in inflation. He is quite happy with the way things are going and he may be counting on keeping pressure on as he feels his efforts are bearing fruit in lower than expected oil prices.
Coming out of the G7 and these central banker meetings, I think a lot of folks may also be front running in getting rid of excess risk ahead of the quarter and month end. I personally think a lot of these folks have exclusive access to these bankers , and what goes on in at the G7 and I think they may be offloading risk. If I am right, I think the markets may have a sharp sell off episode. But more on this later, scroll down for my 2 main scenarios for tomorrow.
My levels for tomorrow
Just like yesterday, my levels today also capped the market on both ends. There was really very little activity below 3810 today. And we could not even test 3851 at all.
In the morning we rallied sharp from 3800 onto 3840. This is where I alerted folks if we do not take out 3851 we may fall back to 3800 and this is exactly what happened within next couple of hours.
Not only did the ES levels did well, I had the NQ levels shared at 11580/11625 do very well today as well.
Here is a plan from Tuesday night if you would like to read.
I try and publish about 2 levels every day for the subscribers which are all based on order flow level 2 reading. If you want these levels as well, click subscribe below.
My key level for tomorrow will be 3851.
I think the bulls had an opportunity today but may have dropped the ball. They will need to work a bit harder and take out this 3851 preferably in IB session.
Unless or until they do, I think 3851 could remain a resistance.
A couple of initial scenarios I will be watching at the open:
Scenario 1: I think if we open between 3810 and 3851, we may find sellers if 3851 is revisited to target 3800.
Scenario 2: If we open or offer below 3790, we may target 3770 followed by 3752.
Emini is currently trading around 3822.
I think a lot of this may also come down upon stocks like AAPL for instance. If AAPL were to remain offered below 141, it may add pressure on the spooz , especially if we were to give up 136 on AAPL. It closed around 140 today.
To summarize: in my opinion (IMO), if we remain offered below 3851, it may keep pressure on spooz. I think the sell may accelerate below 3790 to target 3750/3770.
Longer term, apart from day to day action, there has been no change in my thesis. I will add that a close here tomorrow below 3850 could be considerably bearish for me personally.
In some of the other related market news, Saylor of MicroStrategy that holds a lot of Bitcoin on their balance sheet revealed he has bought another 500 or so of these coins. I think this is quite odd that they will only buy about 10 M worth of the BTC if they think the price is so low. In my opinion, this was just timed to pump the market and that pump never came.
The small size of order may also indicate they expect Bitcoin to fall lower into 12000 dollar zone which I have shared earlier with the folks. Well let us see if this new buy order lifts Bitcoin above 22K but I do think 17500 if revisited and broken exposes lower prices around 12000 in my opinion.
This is it from me for now. Feel free to share and comment on this preview.
~ Tic
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RE: the question what I mean by offered below.. my response below.
As an example - if my level is 3810 and we trade down to 3809, I will consider that offered down below 3810. Now dependent on time of day, type of session, volatility of session, we can see moves above or below these levels all the time. I will always confirm these offered below or bid above with tools I have shared like TICK for instance. If we offered below 3810 but we cannot hold any intraday time frame below it, then I will say the move was a fake out. Like what happened today at 3800.
Tic, how do you expect the market to play out over the coming months? You suggested a few weeks ago that 3666-3700 may be a formidable support for the rest of the year and that S&P500 may be cut in half within a year or so. Would love to hear your views!