SPY - 412.55 Bottom, Buying Opp if you missed the run to 430
0. Will provide updates here;
1. SPY hitting $412.55, as support.
2. More notes here to follow after close;
1. SPY hitting $412.55, as support.
2. More notes here to follow after close;
Important SPY / SMH / Precious Metal Notes
Just because we don't post about every single stock, doesn't mean QQQ and SPY analysis has no value. It has great value. Unless stock specific information is taken into account like earnings or SEC investigation or buyout, etc., stocks move with beta / multiples correlated with the indexes. If QQQ goes up 1 percent, NVDA probably goes up 2.5 percent, with a beta of 2.5 (didn't look it up, probably close).
SMH
Semiconductors
AMD, NVDA, AMAT, MU, LRCX, TSM, TXN, INTC, and the rest usually move with the indexes but have a lower correlation. Some are represented more, and some less in the indexes, and as of late the SMH (Semi-conductor ETF - one of many), has been correlated stronger with China / Taiwan news, and the cyclical nature of semis, which is becoming more secular now and will soon be a secular trade on the underlying data center, fabrication and design will support semi companies past it's cyclicalities. They usually make larger moves than QQQ, and the SMH has outperformed most ETF's in the last 5 years.
Buying OPP
It is a buying opportunity for the semis, AMD / NVDA / place the ones you like here, when the SMH is around 220. 225 if you must.
Gold / Silver - GLD / SLV
These have gotten clobbered. Due to the strong US dollar (10 year high against basket of currencies), plus interest rates (highest since 2010), GLD and silver have gotten crushed.
50 percent upside.
There is probably 50 percent upside here. Silver is more highly correlated with the indexes due to it's utility, and gold much less so, and that is why it has traditionally been used as a hedge. Correlation as low as 1 percent over time. Fed Pivot is only a matter of time, interest rates will come down when supply chain idiosyncrasies are resolved, inefficiencies adjusted, inflation is going to come down ON ITS OWN. My friend Kolanovic, lead strategist at JP Morgan shares our view. Interest rates will come down, and the US dollar is coming down.
Gold, Silver, and Shorting the US Dollar with UDN (short US dollar), are serious money makers here.
Gold and Silver will probably beat a meme stock rally in terms of end of the year and into 2023 returns.
The Fed is going to signal "higher for longer" on inflation, when they wake up to the fact, and Robert Shiller the Yale economist agrees. The Fed has finished it's tightening cycle, and really it ended with the last .75.
They will pivot, trust us. Kolanovic agrees as well on the Pivot.
The Fed
Fed Error is already in progress. Marco at JP Morgan agrees. Last rate hike of .5 in the cards to complete the insanity.
China already moving away from the US Dollar and dumping US Debt, and under 1 Trillion for first time in 10+ years.
US Dollar will have major competition as a reserve currency, and J Powell and his hikes are annoying China to no end, who has pulled QE in the last 2 weeks like the sky is falling, and cut rates TWICE.
Global Recession
China will support the Global Economy, tensions will ease, and China just agreed to supply LNG to Europe to keep them going. Europe will have a recession, and the United States gets and may already be in a shallow one, but nothing major.
SNOW
Snowflake will light a fire under some software today, and there are lots of beaten down play in the software space. The IGV etf is beaten down pretty good.
CRM was a great shorting opportunity, puts or a put spread would have done will this week.
Notes
1. Didn't have a lot of time to put notes together yesterday.
2. So the SPY broke out from 390, looking like the end of a bear market possibly, from the Diamond Bottom, reaching target at 430. Looks like we are in consolidation phase, and we expected a 4 to 7 percent correction at SPY 430, and we got 5 percent.
3. So we retested the TOP of the Diamond formation at $412.55 on SPY which appears to be support.
BUY AT 412.55 ON THE SPY
SELL AT 425 ON THE SPY (If you are trading)
3900 Retest?
We may be range bound, break out over 430 on the SPY, or retest the break out of the Diamond formation at 390.
SPY $412.55 TRADING OPPS
A LOT of people and institutions missed this rally. We expected pullback to the top of the diamond formation, but not much lower. 400 SPY on the table should the sky fall at Jackson Hole this week, that would be a BUYING OPP.
So look for pullbacks on the SPY under 4300 and buy calls. There may be shorting opportunities on SPY and related stocks at this area, but we should consolidate under and move to 4600 - 4800 region by EOY.
I don't think there is any major money to be made shorting the indexes in a YOLO fashion at this point.
You want to wait for PULLBACKS, and load the boat on stock or calls.
If we pullback to 390, go nuts.
BOA and there 300, 320 SPY calls isn't going to happen.
Have a great trading day,
P.S.
NVDA - Buy Nvidia CALLS at the open :) 9:32am
- drchelsea