Daily Plan 6/30/23
Folks -
An early release of the levels today as I am out of pocket for rest of the day. Have a great weekend and a Happy 4th of July.
Remember what we enjoy today and freedoms we take for granted, have been won over a very long period of time by a succession of generations before us who believed in these ideals of freedom and free markets. It is our imperative to protect and enhance these.
The session today was underscored by an excellent GDP revision to 2%.
This was perceived as excellent news for the big banks as they can continue to charge higher interest rates. I agree with this assessment. I think this is late cycle behavior but I digress.
The illusion of prosperity. The big banks roared and the markets rallied at the news as if this strong GDP shows a very strong economy and the consumer. I personally do not agree that the consumer is strong. I think a subset of consumer is very strong but this can not be applied to the entire population. For most of us who are active in the financial markets in one way or the other, we look at the markets and we assume this is because the economy is very strong. This is a different perspective than the most folks. But I can assure you our perspective is a minority perspective.
The vast majority of folks don’t believe in these numbers . All you have to do is drive in any direction 3-4 hours of whatever big city you live in whether Toronto, Miami, or Austin to see the reality first hand .
Now I am not saying this is all bad for the markets in short term. Now the markets like all this in a very perverse sense of way. More agony for the consumer in form of higher rates and higher payments means fatter profits for the banks.
I am not the one to argue against the tape but am stating my view that’s this is not sustainable . Eventually things will break down and the average person will be left holding the bag and the 5-6 big banks in the US will be bailed out on public dime. Dollar is the sacrificial lamb in this movie.
My approach in all this is to avoid the typical FOMO names as I think a lot of juice has been squeezed in them. For example I was a TSLA, AMD, NVDA and SMCI bull at 100, 50, 160 and 65 respectively. In fact I was a bull on these names when no one else was a bull. Readers of this letter know this who have read it for longer than a few weeks.
My approach now instead is to focus on themes which are unique to names like WE , TSLA or MARA or a CVNA. I mean each of these are up 40-50% or more off their lows in days . Sort of very low beta names . Just don’t expect this newsletter to be agreeing with a lot of prevalent wisdom out there . If I agree with the 99% out there then it means 99% of us have really no edge except watching inverted head and shoulders all day! I will continue to follow this approach and share with folks until a time comes when I become a secular bull on all stocks.
I think the main issue is that very few of us can be very good at short term timing and execution. That’s just the reality of how markets work and how the needed skill set is .
If you look at any of the big moves - SMCI, SNAP, MARA, VIPS, these can take many months to fruition. These are not 5DTE weekly time frame calls. Instantaneous moves and gratification means that everyone has realized the value of the call instantly . If this was the case, the markets will stop working . We may get there in next 5 years but today there is still some gap between recognizing value, potential and realizing the full value of the recognition .
Now as far as daily intraday trading goes, that’s a very -very different beast altogether. It’s a very different mindset and a very different skill set that can constantly day in and day out extract some thing out of the markets. That can take time to develop. Don’t quote me but just based on my personal experience you need a methodology with 5-6 intraday plays both up and down with about a 60 % win rate and a 1.5-2 or more R to win intraday. Anything about 60/65% I think is unrealistic expectations; unless you are a nano second scalping algorithm which I am 100% sure you are not .
On my part I have shared tools and indicators which are pure price action based to help folks’ educational goals . They are available on this substack for everyone . I may do the substack thing for another year or so but eventually I want this to be a cozier group of really serious hardcore minded individuals with a much higher barrier to entry . We will see when we get there but I feel the markets will force a lot of folks to drop out of the race altogether, leaving only the most serious disciples of the market goddess to understand her ways.
Are you going to be one of them?
These results are not necessarily to discourage any one but I am just thinking out loud how the events of next 1-2 years may transpire especially with respect to the level of retail participation. On one hand companies like HOOD and COIN have democratized the retail participation but on the other side they have also led to inflated valuations and enabled dangerous speculation by folks who are frankly very new to this. I mean if you are 5-6 years or less in this, then you do have a lot more events to see to solidify your experience and market wisdom. One some one is burned in markets they are unlikely to ever come back unless they really love the game.
Over the weekend, I may share a consolidated post with educational content for any one serous about learning order-flow. Stay tuned.
In some other markets oil had another good rally off this level, I had shared many weeks ago. This level keeps giving for the oil bulls !
Gold as anticipated by me is now near 1900. This 1880-1900 is make or break. I think it’s a very good support for gold and we could see a push back above 2000.
On the Emini SPX and NQ Nasdaq side, my levels from last night were the highs of both markets in overnight session. NQ at one point dropped about 200 handles before finding some support.
For tomorrow…
I think it comes down to this 15150-15200 level for the NQ bulls and is a key area.
I am very curious to see if this big bank rally holds. I think it will hold. My LIS on names like JPM is 135-138. I think if XLF rally holds, this may not be great news for XLK type names. When you add both XLF and XLE strength to the mix, it could take the wind out of XLK and I think this is why XLK has been little skittish ahead of tomorrow’s news. It may be very early but I do think we are seeing first signs of emergence of XLF overpowering XLK. I had alluded to this almost 5 weeks ago and now I am seeing more signs of this.
Scenario 1: Bulls want to clear 4430 and want the level to hold to target 4455.
Scenario 2: If the bulls can not take out 4430, then I think they can see us trade down to 4390-4400 again.
Look with the H2, Q2, month end and core PCE tomorrow, this may be a very choppy session also. So be on the lookout for large choppy ranges as well.
This is it folks. Have a great weekend. Enjoy.
~ Tic
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