Weekly Raid #34 - Spend and Mend
Good Morning Traders!
Some personal issues got in the way here so I didn’t get to trade anywhere near as much as I wanted. On the plus side, that means I didn’t blow anything up.
In addition its the End of the Month. So be aware that large amounts of f*ckery happens at month end.
Today should be an exciting day though. Lets jump in
News of the day
A lot of spending data is due out this morning. First up is PCE at 8:30. This measures the price paid by consumers for the end product they purchase. The M/M number has been declining slightly recently, but the Y/Y number Is still pretty elevated. I expect that this trend will remain intact and that we will start to see prices creep up again heading into the fall and winter in the US.
At the same time, we have personal income and personal spending M/M changes. These ideally would move in opposite directions, meaning income increases and spending decreases. While those pinheads at the FED would tell you otherwise, this would show that income is outpacing expenses and savings are building. Savings always lead to a stronger economic base because it provides a safety net against sudden price or supply shocks.
Finally, at 9:45 the Chicago PMI is released. Just like the other PMI releases, I expect this to produce some short-term volatility in the futures market but not much else in terms of widespread moves. We have been contracting here recently and I would expect that trend to continue as prices continue to slowly climb and labor becomes more and more difficult to obtain.
So far it’s looking like a quieter morning on the macro front. Continuing to monitor the price of Oil, Bonds, and Gold to monitor for any signs of a shifting economic condition. While there is nothing specific to look at today, its important to remember what we are actually looking for from a macro standpoint. We are looking for a severe deviation from the norm and we want to see that as a trend across multiple asset classes.
As an example, if both Gold and Bonds start to act strange. Huge price swings, odd volume behavior, multiple days of strange headlines, then its a possible conclusion that something is going on. Somebody large is adjusting a position or preparing for something new. These things don’t necessarily indicate a crash or a problem, just that someone large enough to influence the actual market dynamics is moving money around. It’s just something to pay attention to.
TSLA is up through the VAH on the year, looks to be gapping up a little premarket as well. I will most likely look to initiate a small trade to see if it goes back up into the 270 range. This will have extremely tight risk management though as I do not trust the price up here. But as the saying goes “The market can stay irrational longer than you can stay solvent”
COIN is also on the watchlist for the day/week really. They have some interesting things coming down the pipeline. They have teamed up with PayPal in Europe, have continued to expand their Coinbase Pay program here in the US. In addition we cam right down to the yearly VAH and bounced. IF we can get back over the current POC at 85ish I think we could be in for a run back up to the 100’s levels.
NKE is the last large name I would look at to initiate a swing trade today. They are back inside their VAL on the year and I think this gives it some potential for a move back to the yearly POC at 108ish. As always spreads are probably the best way to play some of these as they offer the best risk/reward possibilities and you only need to get direction correct.
As always trade well and Good Luck