Need to chart more carefully and must budget more time to do so before market open. Must chart with lines, not just glancing at daily charts and assuming patterns. A day may come where I’m proficient enough to pull that off, but it’s not here yet. Be thorough in your analysis so you can be calm in your execution.
Reading an article this morning, about TGT & Walmart, about the beating they took on earnings, about how on the earnings call the CEOs noted a sharp uptick in fuel costs & costs for food, the steepness of which they weren’t expecting. Don’t know how much correlation or validity the article holds, but the logic of its premise seems straightforward. Higher costs for consumers is a reflection of higher costs for businesses. Companies are affected by the price of commodities, and when that expectation isn’t priced in, fear permeates. But how much is priced in. Gas is continuing to see an uptick, does this mean I should look to other industries who’s overhead will be heavily impacted by inflation & fuel costs? Is this the way to anticipate short term fluctuations in the price of some securities. It seems strait forward enough, but I’m still an economic tyro.
Industrials
- As a sector, in a clear downtrend & at all time lows for the year as of yesterday, Seems to be descending in a variety of a channel, possibly broadening in formation—a bearish sign. Wick yesterday.
- DE | Earnings this morning & massive dump in response. Is this another TGT type situation? It manufactures equipment, which necessitates raw materials—oil, steel, copper. If the prices of these commodities are rising, does it then follow that margins will be tighter for the manufacturers, thus profits will be less, thus stock will drop? Massive gap down from earnings. over 20 points. There seems to be a Bear flag formation on the daily & this could be the continuation of it manifesting. Adhere to levels but beware of congestion & chop, there is likely to be strong demand at these low levels. Touching nearly 340 now from a close of 364 yesterday. EXERCISE CAUTION this name fluctuates with high ATR. no more than 3 shares at a time.
Communication Services
- VZ | May have misjudged the formation yesterday as wedge when really it may be more of ascending triangle. Could still just be massive flag on daily, but currently VZ breaking out from daily level. with reasonably strong volume.
Consumer Discretionary
- MCD | Looks weak, approaching daily demand level. Break below this could see meaningful continuation through small gap present below it. Use 228 as level to base trades off, look for correlation in indices & weakness. PM showing an uptick, may invalidate this current premise.
Information Technology
- Industry as a whole forming what seems to be convincing falling wedge. If this carries out, could see a reprieve and a powerful one. For the time being the trend is down.
- AAPL | Looks weak in premarket, rejecting significant 140 level it broke below yesterday. If it can retake this level with meaningful activity, then there’s potentially a chance for an upside play, but if the indices continue to falter & this name cannot regain strength, seems like a viable short.
- NVDA | Seems weak in PM but is above significant daily level with some room to fall back to it. Feels like there could be opportunity in this discrepancy, while there is no abundantly clear pattern on daily other than that we seem to be in a downtrend and trendlines of daily are creating a mildly broadening channel.
Healthcare
- As an industry, PM seems to be having some strength. Not a clear picture of what’s to come on daily index chart, but trend is currently down.
- JNJ | Charted from yesterday. No clear patterns other than what seems to be a bounce from meaningful 174 daily level & bullish looking premarket. Not an ideal play. look to cut from watch list, not clear direction, though for some reason the premarket action is tempting to me.
Overall
- SPY | Seems bullish a bit premarket—going to open above daily level, but this could be just the trickling remains of short covering or delusional demand, as /ES seems to be forming pretty clear wedge on hourly which experience shows are not to be scorned. If I were trading larger I would feel justified in buying SPX put for today based on the /ES chart.
Feeling prepared but relatively uncertain. There seems to be no immediately clear moves. Exercise patience and caution. Be wary of taking moves right at the open. Adhere to your thesis.