Weekly Raid #70 - What a Cluster
Welcome back to another week traders.
We have a ton of items to watch this week. War, Earnings, and Oil are at the top of the list. Here is the list of major earnings releases this week.
News of the day
Today we have nothing in terms of actual news. Earnings are the only thing we have to keep an eye on today. Philips and Logitech would be two of the larger earnings to watch because they have exposure to the consumer sector.
Given we have nothing really crazy to talk about (yet). I want to look at some clustering of returns around the S&P500. The below chart looks at every year since 1928 and compares their returns as the year progresses (day 0 to day 365).
So let’s talk about what that means. The majority of the years rotate right around the zero line, there are a few that explode higher and a few that explode lower. This means that most years you can look at modest returns if you just buy and hold and that is why dividend reinvestment is so important. As you continue to buy additional shares from the dividends you become insulated against the drawdowns from a dollar-cost perspective.
This insulation gives you 2 additional benefits, the first is that as the price actually draws down, you can buy shares cheaper and buy more of them. The second is that when the price does finally explode higher you are along for the ride with a larger number of shares.
So While I am an obvious fan of active trading (I do it weekly), having a long-term buy-and-hold portfolio will do you significantly more good than your best day trade over time.
With some high-powered earnings this week just pay attention to if your company reports.
First up on the Watchlist is AMZN. It is gapping down to sit right on a ledge of a low-volume node and a multiple bottom on the 4hr. I am going to watch here for support and if the market looks like it’s getting stronger then see a potential return to the 130-135 mark.
Next up is NVDA. It looks to be sitting right on a price edge with multiple bottoms here to use as support. Like we discussed last week, if we get too much below the 408 zone then we could really be in for a ride. We have a huge Gap below us.
VXX is last up on our list this morning. We are obviously seeing a spike in volatility with earnings falling, global conflict on multiple fronts, and government leaders (just in the US) that are painfully incompetent. I would look for and additional spike into the 30’s and then I would be looking to short it through spreads again.
As always trade well and Good Luck
As always this is all for educational purposes only. You are solely responsible for your trades as I am for mine. Nothing in here should be construed as financial advice, but only educational content about the markets and my particular trading style.