August 2, 2020
Stocks – AMZN, AMD, MU, NVDA, GILD
Macro – SPY, QQQ,
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- Beware – Morning 7.31.20
- The Four Horsemen Ride Tonight
- Yields Are Cracking On Bad Jobs Data
- Fed Paints A Gloomy Outlook
- Bets Pile Up Micron Falls As Much As 10%
- It All About The Fed, And Bets Are For Less Liquidity
- Downward Trend Are Still In Place
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Earnings will be notably fewer this week, and perhaps that means the market will need to find a new focus. I was modestly surprised by the lack of performance in the S&P 500 on Friday, rising by 75 bps, and most of it coming in the last hour of trading. That has generally been the trend lately, the late Friday run-up, mostly because MMonday’shave been relatively strong days for the market recently.
But because Apple was up 10.5%, with a nearly 6% weighting, most of that gain could be attributed to Apple alone. Interestingly, the number of stocks above their 200 day-moving average fell to 52% on Friday and has been struggling to push higher recently.
Also, there has been some considerable weakness in Asia in the past few session, with Japan, Australia, Hong Kong, and South Korea, on watch for lower prices. The strong yen is most certainly not suitable for Japanese equities and is likely a contributing factor to JJapan’sweakness.
Hong Kong has struggled and has what appears to be a descending triangle pattern forming, that is bearish.
The Kospi has been one of the most robust markets I have followed outside of the Nasdaq, so I am very interested to see if that uptrend holds.
Australia has weakened dramatically, as well.
The German Dax has also broken a critical uptrend, with the potential for a rising wedge pattern that has broken too, that is bearish also.
NASDAQ 100 (QQQ)
Of course, we have the Nasdaq 100, which still looks very strong at this point. As long as it holds that uptrend, it hard to say the market will fall. That uptrend may be the most important in the global market. Again, I have been seeing a lot of betting in the puts options recently in the Nasdaq ETF QQQ. Sometimes it takes a couple of weeks for trades to develop, so it is hard to go against these options traders. You can see the Nasdaq has topped out for now, and even the strong results of Apple, Amazon, and Facebook, couldn’t get a breakout. (2-Week Free Trail – Big Option Bet Suggest Market Has Seen Its Highs – Morning)
S&P 500 (SPY)
Meanwhile, the S&P 500 is much closer to its uptrend, then the Nasdaq presently.
You can see in the chart below why we care about the international, Germany bottomed before the SPX, the question now is it is topping before the SPX.
While the KOSPI and the NASDAQ 100 appear to be nearly perfectly correlated.
AMD has completed its breakaway gap, and I don’t think it fills any of the gaps yet. It is likely consolidates sideways for a bit, between $74 and $79.
I can’t imagine that after AAMD’squarter, that Nvidia will report bad numbers. The chart is starting to look more bullish than bearish. Remember, at the beginning of July, there was a lot of bearish betting for the middle of August, which, coupled with the chart, made a compelling bear case. At this point, it is simple if the close above $430, the bear case is likely dead, and my thought process will have been proven wrong.
The market didn’t seem to love Amazon’s results, like Apple or Facebook’s results. The significant level of resistance is at that 3260 to 3270 zone. The worst-case scenario for Amazon is a decline below 2900, confirming a triple top and break of the uptrend.
I was seeing a bunch of bearish betting in Micron last week. The bears haven’t been right very often, lately, but I’m just telling you what I’m seeing. The chart does support the bearish betting, with a break of the uptrend sending the stock to $45.50. ( 2 Week Free Trial – Bets Pile Up Micron Falls As Much As 10%)
It took a while, but Gilead finally cracked. It might still have some further to fall, perhaps to $67.75. The bearish options traders did get this one right.
Anyway, that’s all folks
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