Strong Stocks. Weak Dollar.
Midweek Market Update July 12, 2023
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The Markets
Inflation improved. CPI data came in slightly lower than expectations and stocks jumped. Here are some notable occurrences:
Mega-cap tech is catching up after a quick visit to the 21-day MAs and some effects from the Nasdaq 100 rebalancing
Financials (XLF) are breaking out
Energy (XLE) is improving and testing its 200-day MA and the Oct. ‘22 low AVWAP
Interest rates (TNX TYX) have improved slightly
Volatility (VIX) remains very low
And as previously mentioned, inflation wasn’t as bad as feared
In short, stocks are getting stronger, not weaker. The trading environment is getting better, not worse. We should act accordingly.
That doesn’t mean buying every breakout that comes along. It means having a watchlist and a plan for different scenarios. It means being ready to buy pullbacks in strong stocks. And it always means utilizing proper position sizing and risk management.
The Charts
SPY is breaking out and it’s up and over the recent pivot high. Today was day 3 on the bounce from the 21-day MA. A little more upside followed by a retest of the breakout level would be a commonly seen scenario.
QQQ is flirting with the pivot highs made in August ‘22 as the Magnificent 7 seems to bounce back from the rebalance news well.
IWM is finally over the congestion zone again. Small caps are leading the charge lately and this strength adds to the robustness of the overall market. Although the bounce has been straight up for several days, RSI remains relatively calm at 65.30.
DIA keeps improving and was over $345 briefly today.
DXY hasn’t been included here for a while as it has been range bound between roughly $100-$104. Today it is below the February low pivot and has room down to $99, a potential catalyst for higher stock prices.
The Closing Bell
Another reminder, we’ll get PPI data tomorrow morning followed by some bank earnings on Friday, before the bell.
Also on Friday, I’ll be on a Twitter Space with Michael Gayed of The Lead-Lag Report at 11:00 AM. Come join the conversation.
The Disclosure
***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.
POSITION DISCLOSURE
July 7, 2023, 4:00 PM
Long: ADBE, AMZN0721C130, GOOGL, GOOGL0714C123, LABU, MRVL0728C63, MSFT, QQQ, RXRX823C12.50
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike