Weekly Plan 10/30/22
Hey folks,
My main expectation from the emini S&P500 at the start of last week was that the bears will need to take out 3680 to be successful at attracting lower levels. I was bullish last week not only in the S&P500, but several other names.
As the week progressed, into the latter half of this past week, my Line in Sand (LIS) shifted up to 3770. This level came into play on Thursday night, after some key earnings from AMZN and AAPL.
We sold off heavily on Thursday after noon but stalled at 3770. This was a key level- as the market in the next several hours staged a 150 point plus rally to close Friday at 3925. An impressive feat, especially considering not many anticipated this, except me and perhaps a handful others.
The predominant bias of a vast majority of folks to me seemed to be bearish last week and especially so on Friday.
This week now officially caps the upper end of my range from 3550/3600-3950 that I shared about 5 weeks ago. At 3600, over a month ago, I had called in this very publication that I do not see a high probability of a test of lower levels below 3550, unless we tested that 3950 first.
In fact, I had shared that if we sell down into sub 3550, that bear raid may be extremely short lived. How short lived was it?
It lived less for an hour or so.
So, here we are, having covered these 400 odd points or so , in about 5 weeks. What it next? Are we talking 4200? Are we now going to crash back below 3600? Read on to find out my 2 cents on this.
Here is the link to the plan from last week, in case you have not yet read it.
I was also bullish on Nasdaq NQ last week with my key LIS being 11000. See below.
It turns out this was indeed almost the low of the week before a massive run up.
Chart B below for the Weekly NQ Auction.
I think a lot of folks were also hoodwinked by AAPL this week
While I avoided being bullish on the likes of MSFT and GOOG at their earnings, in fact I felt they could drag the general market lower, I had no such qualms about AAPL.
I had good confidence that the stock will not sell after the earnings and my LIS on this was 144/145 with support below around 136.
Lo and behold, the stock dipped after it’s earnings into 136 and was promptly bought up, wrapping up one of the best day in a couple of years, dating back to the pandemic beginning, to settle around 156.
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DLTR
From my plan a few weeks ago, Dollar Tree was another huge winner which I had predicted could rally from that 135 back to new highs. Here we are about to test those highs again near 160 within a few weeks.
NOC
NOC was also a tremendous call from me where I had expected any dips into 500-510 may get bought and I eventually forecasted that we may test 600. The stock rallied above 550 within one day from my post.
SNAP
I was wrong on SNAP on the earnings day. The stock fell into sub 7 dollar area. However, in my weekly plan last week, I reiterated that SNAP was oversold on excessive reaction and this week saw an impressive 30% plus rally in SNAP.
If you have not already, I suggest you read my prior weekly plan to stay on TOP of this continuous auction.
We also saw a good week for both the oil stocks and the gold stocks like the NEM. I have been a bull on oil stocks for almost a year now, though Gold stocks gave up some of their gains in latter half of the session.
Recent rally also has been IMO at-least a function of the dollar softness. To this end, I was a bull on Bitcoin for swing time frames, at 19000. This week we saw Bitcoin rally up to 21000 off those levels with very little activity below that 19000 areas.
Can this dollar softness last or will it surge again
So, I a was one of the first to admit that the Dollar may have peaked around 112-114 range. It has seen a steady one way action since then- to the downside and now closed near 110 zone.
I do think Dollar could remain capped by that 112 handle. However, I will consider a Daily close above 112 on this index may target erstwhile highs around 114 but for now I think 112 may serve as a resistance.
Event risks next week
Next week is a very heavy event risk calendar.
Starting with Monday
CPI from the Euro Zone
Cash decisions from the RBA
Tuesday
ISM PMI
JOLTS Jobs
Wednesday
FOMC Day- all about the FED!
Thursday
BOE rate decisions
BOE speak
ISM PMI (services)
Friday
Wrap the week up with Non farm payrolls and key metrics like the wage inflation
Fuel prices also make new highs as I predicted a few weeks ago that we may see a new high in the diesel fuel prices as we head deeper into this. I think with winters approaching, the US and the West in general are vulnerable to energy price shocks.
When you are in a conflict like the one we are right now with Russia, both sides have made preparations and calculations that are not always obvious or covered in the mainstream news. You obviously have short term decisions driven by political expediency like to consume all of your strategic supplies of fuel in run up to an election. Then you have the other side also calculating and scheming to align with it’s allies to inflict economic and social pain on the other side.
This is why I called a few weeks ago that even with a collapse in energy prices, we may still see a surge in refiners like the XOM, OXY etc
FED is backed up against a wall vis a vis how much can they tighten - this softens the dollar and any softening in dollar aids in firming up the Crude prices.
Then you have seasonal issues. With the strategic supplies at their lowest, economy still robust in the sense you still have to keep the lights on.
I think this may mean we continue to see an upward trajectory in energy prices thru the winter in particular diesel and heating oil costs. Eventually, I think this gets resolved with a collapse in the global economic activity . In that sense, I think we are yet to see new record higher prices in energy. I think we are far from it.
Key earnings
In the next section or two, I want to talk about few key earnings next week- like AMD, MRNA, SBUX, ROKU, SQ, COIN, CVNA, ABNB etc
SQ
They report on the 3rd. The stock has been a massive black hole losing money every quarter and now down to almost 80% on the year. Very bad and soft performance.