Weekly Raid #29 - A Flash or Crash
Welcome to Wednesday Traders
We have some solid news due out this morning and some additional information has come out about where we stand on money supply and credit.
Lets take a look at what the day has in store for us.
News of the day
At 9:45 we have a few PMI numbers due out. These almost always produce some serious market volatility, so its something to watch. The composite report is what I usually keep an eye on for volatility because it encompasses both service and manufacturing. If we maintain a level above 50 its showing that the economy is still expanding. under 50 and it shows the opposite. Over the pas several months we have been trending down, and often times the M/M change on these numbers is more important than the actual release. Watch for market trends.
We also have new home sales coming out at 10 today. With a miss on existing homes yesterday, how this reports will probably be pretty telling about months to come. This will be the first report since the additional rate hike, and it looks like we could see some addition hikes in the near future.
On a higher level, there are some strange things happening. Markets haver surged the past few weeks and months, but if you look under the surface things don’t look so hot.
First up is inflation, the numbers coming out of the Fed still don’t seem to match up with reality. If you go to a store to buy almost anything prices have appreciated more than the 3ish% that Fed is saying. The only thing down recently are eggs, but those are still double what they were 18 months ago. (For anyone not great at math that’s significantly more than 3% annually).
Next up is Jobs data. Zip recruiters data is out, almost 35% of people either took a lateral pay move or a pay cut from their previous jobs. However a large portion was also temporarily ““ unemployed. Either way that does not bode will in a market with increasing costs.
Finally is housing. Affordability is at a 20 year low and credit card debt is at an all time high, right in time for record rates to hit again. I think all of these things will dovetail into a credit event at some point. While I am not in the business of predicting the market, I do think the probabilities favor an credit event outcome.
NVDA is the top watcher today with earnings due out after market close. I am not playing earnings other then the longer dated short I have open. Nothing on the weekly front, there is too much risk there for me. HOWEVER, it will be very interesting to see if continue the buy the bottom line, sell the guidance routine.
I would also be watching AMD for a sympathy play to NVDA. No levels or anything here, this would be a pure momentum trade.
Last up on the day is BA. We are still pretty extended on this name in my opinion. I would look for this to come back to the 220 level and then continue down to 212ish potentially. We have a 5 point earnings gap under the 220 handle. In addition to this, COVID hysteria looks to be back on the table going into the fall, and I think this could potentially hurt the airlines.
As always trade well and Good luck