Market Intel Week #1

The SP500 futures have closed another trading week with a minor gain of +0.32%. During this period we have observed substantial acceleration from the lagging stocks that were selling off the whole 2021. Despite the fears of another leg lower in the market, we do see many charts that are starting to become phase 1 trends or are building constructive bases. The earnings season is still in place and we are observing some positive sentiment on the upside when it comes to reports. Many estimates are beaten due to the extreme bearish expectations for the Q2. Our long term view does consider a scenario when we try to test lower prices or July lows but for now we are playing the upside until we see a bigger slowdown in the momentum. Important thing to add here is that investors do read the economic indicators which are lagging but the decisions they are making are 3-6-12 months ahead. The rally we’ve seen in July is the result of that type of decision-making process. By the end of the day, there are not many places in the world where you can park 5-10 trillion with a substantial level of capital safety and a powerful economy, even if it is slowing and some inflation fears kick in.

Commodity prices are slowing down the inflation rate and that definitely helps the market as well. Crude oil prices are down -9.7% this week. Natural gas prices are down -2.01%. We did see some interest in gold in the past few weeks but to be honest with you, it is very hard to actively trade technicals in this instrument.

Technicals

NDX/SPX ratio signifies that we are in the rally mode with a substantial momentum to the upside. Just looking at the technicals of the ratio move can help us understand that the market is in the risk appetite mode, will it continue next week, time will tell.?

The ES futures are trading over its 5 EMA and are testing it as support. Even one day close under will not significantly change the overall structure. If we want to see lower prices we need to set a series of lower highs on the daily and even then we do have tactical zones from which the market can bounce significantly higher.

VIX finished the week at -0.84% that does help the market prices rise. All the price action since Tuesday was fluid to the downside.

TNX is up +7.5% this week pushing the $TLT lower -0.82%.

DXY is up +0.71% this week but it is definitely starting its distribution mode. We will probably not see strong drops until we flip the 50 SMA but in this case some fundamentals must change. Reminder - weaker dollar helps the market.

Digital assets $TOTAL +1.54% for the week so far. We do see why we can slowly grind higher with the overall market but it is early to say if this is the major bottom. The observations so far are saying that BTC is following with a huge lag the other markets while the ETH is a lot faster with a higher beta in place. We do not have any positions related to this group.

Volatility drivers next week:? News calendar? |? Earnings List

On Friday the extremely good NFP pushed the futures lower on Friday with the idea that the FED might be slowing with the interest rate increase but by the end of the day we finished near green territory with Russell being the leader.?

Summary

As a conclusion for this week I would like to point out that the market is a lot better than it was a month ago. Despite that, we are focused on stocks and setups that have a volatility driver behind, like Earnings or Group move. We are expecting to deploy more capital next week with the new trade ideas and setups knowing that some of them can easily fail if the market wants to reject some technical levels. Our approach for the next week is moderate to aggressive with a long/short tactical execution.

Feel free to call (+357 99 202 788) or PM me with any questions on up-to-date market and stock specific information.

Have a great day!

Yurii Kitikari

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The information in this email message is solely the opinion of the author. They are not recommendations to buy or sell any security. There is no guarantee (implicit, explicit or otherwise) that any strategy discussed or forecast provided will be successful or accurate. Any person who acts on any of the information, opinions, etc. contained herein does so at his/her own risk. Sources: Barron's; Inc.; WSJ; CNBC.com; StockCharts.com; IBD; Bloomberg; TradeTheNews; Briefing.com; Investing.com; TradingView; Chartpattern.com.