After a week of big events between the FOMC meeting and monster tech earnings reports the SPX had a relatively quiet range for the week closing slightly lower overall. Interestingly however, the VIX index closed the week higher and really did not get crushed after FOMC and key earnings reports passed. It still seems like SPY and QQQ is having a tough time staying at new highs lately. SPY closed the week right at its 8 ema, after making a new high briefly above 440. July was a positive month overall but led by just those handful of mega cap stocks. One of which crashed and burned after earnings in AMZN. If these tech names start to falter the market will need to see rotation to further lead the upside, otherwise increased risk of a sharp pullback increase. August can tend to see volatility and that seems like what the VIX is pricing in still. August thru September generally sees the best odds for bearish markets as well so being near the highs with faltering momentum signals doesn’t make it a great risk/reward to be loading up on new bullish trades. Being selective and ready to buy off lower supports likely will be a good way to focus ahead. Options market is pricing in a SPY move of $6.25 this week.
3 PEAKS MARKET SIGNALS OVERVIEW:
TREND- The short and long term trend of the market being bullish biased increases the odds of pullbacks being good buy opportunities.
SPX Short term trend of the 8/13/21 EMA’s = Strong bullish trend
SPX Long term trend of the 21/55/89 EMA’s = Strong bullish and EMA’s stacked positive.
CONDITION/BREADTH- SPX MACD Momentum is above zero and RSI is 58, although both are lower than they were the last time SPX made new highs in July. Bearish divergence.
Cumulative Breadth Advance/Decline line rebounded last week but still failed to make new highs with SPX. NYSI Summation index showing some signs of trying to bottom out but still remains below its 8 day MA. New 52 week highs have been lagging with SPX near highs. Ticked up a bit last week as NYSE had 196 new highs on Friday and the 20 day average is 135.
SENTIMENT- AAII Investor sentiment survey Bullish sentiment ticked up to 36.2% Bulls from 30.6% last week. Bears down to 24.1% from 30.6% last week. Bulls/bears ratio at 1.50.
Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%. Bearish signals occur when Bulls exceed 55% or if Bears drop under 20%.
S&P SPY Sector Glance:
8 of 11 SPY sectors are in strong bullish short term trends as shown below. Basic Materials sector led things this week as Tech and Discretionary pulled back due to weak earnings in names like AMZN and FB. SPX closed down -0.37% for the week.
SEASONALITY ODDS:
The last week of July did end up being weaker as the calendar suggested. The first week of August is also a bearish bias but quite mixed with the Nasdaq weaker than S&P over the years. Looking into the second week of August, that weakness persists further until around the Friday before options expiration week shows good potential for bullish bias. Remember these are just tendencies and I always let price action confirm any trade setups.
July inside month candles: Stocks that stayed within the high and low of its prior month. A break above these highs could trigger larger moves for fresh opportunities.
WFC, GS, MMM, DE, GSK, MO, USB, COF, ITW, SO, RACE, VRTX, COIN, BIIB, EA, GLW, SWK, BBY, RNG, URI, DLTR, AMC, EXAS, CNP, CBOE, CRSP, CIEN, NTNX, SPCE, AEO, FSLY, FEYE, FUBO, CWH, EGHT
Bull Put Spread Trade of the Week:
Peloton (PTON)
Sell the August 120/115 put spread for 2.50 or better. Earnings not due out til late August after Aug opex.
PTON has been pulling back to its 21 week EMA and consolidating in its June price range after the early summer rally. The 50 day MA has been supportive on dips and looking for that to hold again near 115. The weekly chart is forming a squeeze that is compressing and ready to fire to the upside soon.
Individual Stock Scans of note:
Weekly inside candles: NVDA, HD, ADBE, KO, ORCL, CRM, VZ, NFLX, AZN, TXN, HON, SBUX, UNP, LOW, AXP, SCHW, IBM, SNAP, SQ, USB, HCA, CSX, TWLO, D, DOCU, CRWD, DASH, TWTR, MET, MNST, KMB, MTCH, EOG, AIG, DD, PPG, PTON, LUV, DAL, ETSY, OKE, CLX, AMC, MGM, CZR, PLUG, CREE, SKX, KSS, BYND, FL, AEO, JWN, FEYE, SPWR, BBBY
8/21 EMA Daily Bull Cross: GSK, ADI, NXPI, COIN, LI, HIG, ON, CBOE, TECK, JNPR, FLEX, CWH, RIOT, CSTM
8/21 EMA Daily Bear Cross: AMZN, PYPL, AMGN, LOW, MMM, VALE, CL, D, PINS, AAL
Stocks compressing in TTM Squeezes within 10% of 52 week highs: AAPL, JPM, WMT, UNH, CMCSA, VZ, ABT, ABBV, AVGO, TMUS, TXN, BMY, SE, AXP, AMAT, GS, IBM, MMM, CVS, VALE, SPGI, LRCX, MO, GILD, TJX, COF, ITW, CRWD, JCI, BK, MTCH, EA, DFS, AFL, DDOG, NTR, SWKS, SYF, HIG, TSCO, LBTYK, CNP, NRG, JNPR
55 day Highs with strong closes: NKE, ABT, COST, MDT, HON, LIN, INTU, SPGI, INFY, ADP, SHW, BDX, ADSK, ETN, EMR, MRVL, TT, TEL, CARR, INFO, A, APH, PAYX, CDNS, YUM, RSG, IFF, ROL, DGX, PNR, ALKS, MIC, CVA