News
BREAKING: New York Fed survey of consumer inflation expectations registers its biggest drop ever https://cnb.cx/3P1i3m0
This is great as it means rate hikes might not be as needed as much anymore in the future.
- Investors are looking for clues on what the next rate hike will be. Strong employment report suggests strong economy which calls for a higher rate hike.
- There is an inflation report coming out which will affect the market?
- Probability of a hard landing is rising
- Are all of the What to watch this week: section of this article important to the market?
- Weaknesses in the semiconductor and fear about the inflation data coming out
- Nasdaq is up 18.8% from its low point in June
- the chip sector has been a historical market-leading sector
- hopes of inflation peaking have helped the S&P 500, but those hopes might be premature
- the CPI report will put pressure this week
- might be volatile weeks ahead
- is the recent bull run accurate or will it tumble with a slower economy?
- wells fargo strategists suggest projections have too positive
- meme stocks are gaining popularity again
BREAKING: Consumer prices rose 8.5% in July, less than expected as inflation pressures ease a bit
Wholesale inflation fell 0.5% in July, in another sign that price increases are slowing
This supports the idea that strong rate hikes might not be as necessary in the future. So it’s a good sign for the market.
Despite the inflation decrease to 8.5% from 9.1%, there seems to have been losses on Thursday.
NVTA is a genetic testing company that almost tripled in value after their earnings.
*There were 4 stocks in biotechnology that were top gainers, so not exactly the same industry, but somewhat related.
But the stock went back down once traders started cashing in on their earnings.
With that being said, it seems that with earnings, a lot of people buy into the stock and then sell once it goes up, meaning there’s a lot of volatility so that’s why we see the stock go up and down.
My question is, does the stock market in general go back to the normal level before it went up? Does it go back down a little higher or lower?
I may be wrong, but I believe what this article is saying is that there are less people employed, it doesn’t specify whether they’re being fire, quitting or laid-off.
But with fewer people being employed, I think this plays into the plan of the Fed to slow the economy down, which means strong rate hikes might not be as necessary. Good signal for a bull market.
This is not talking about the volatility but how the market had correlations that it hadn’t before.
And that it’s changing so quickly that it’s time to reset strategies because it’s a different market now than it is before.
What the Latest Inflation Data Tells Us
Although inflation came down from last month, with so much volatility who knows what the next month holds.
Earnings were lower than usual because of low-profit margins due to inflation.
These companies, thanks to earnings and news they went up, therefore driving up the market on Friday this week:
Tesla Readies a 3-for-1 Stock Split for Aug. 24
This might drive up the stock momentarily because of investors that are looking for a quick profit.
Wall Street extends winning streak to 4th week
The rally was thanks mostly to technology stocks
The slowed down inflation report, alongside the wholesale also helped drive the markets up
The home sales report and the earnings of Home Depot in July will help asses how the housing market is doing.
The stock market earnings season is coming to an end.
WMT and HD will mark the end of earnings seasons for retail companies.
with gas prices going down along with the price of goods, the next GDP report might not be as bad.
The earnings of WMT and TGT will give an insight into inflation expectations and consumer spending.
The second quarter is the strongest for construction tools/equipment companies as projects pickup in the summer.
Major earnings reports coming out next week.
It’s saying that the silver lining is that a bear market sets the trend for a bull market. After all, the market can’t stay bear forever.
Here’s a good place to see what’s going on in the market: https://www.investors.com/category/market-trend/the-big-picture/
Economic factors
- Fed meeting: Sept 20-21
- The US Treasury is at 2.781%
- Yield curve: downward slope
- US dollar index: 106.17
- Mortgage rate: 3.5-5.75%
- Crude oil: 90.07
- VIX: 20.87
- Inflation report: August 10th
Negatives
- strong job numbers
- fed may continue rate hikes
- fed has had stock market frinedly policy
- technical perspective
- needs to break 418
- SPY touched 418 but got rejected
Positives
- valuations look attractive
- undervalued companies
- stock market has come down a lot
- elevated cash levels from individual investors
- people with savings from government
- investor sentiment has been bearish
- lot of people sold, meaning not lots of sellers left
- value of dollar went up
- so it might not keep going higher
- if job report is high, it’s not a strong sign of recession
- higher income consumers are still spending
- two negative consecutive GDP reports
- unlike synchronized global downturn
Moves
Volatility is low on all these companies, they don’t have earnings before expiration date, Tip Ranks has a strong buy on COST but only a moderate on AAPL.
- SPY: put spread, strike prices 383/373, exp. date Sept 16
- SPY: call spread, 441/451, exp. date Sept 16
- both of them had a delta of 85% probability of profit, SPY seems to be on the bullish trend for the past two months, but with the delta, I believe this is a good range that it’ll be in
- AAPL: put spread, strike prices 150/140, exp. date Sept 16
- AAPL: call spread, 180/190, Sept 16
- AAPL is a company I think will do well on the long run, it has run high right now, so it has an RSI of about 70 but I believe it will keep going up or stay about the same
- COST: put spread, strike prices 495/485, exp. date Sept 16
- COST: call spread, strike prices 590/600, exp. date Sept 16
- I believe in this company, tip ranks has a strong buy analysis, the deltas were of 85% profitability
Questions
- What should I ask myself before making a move?
- What does it mean when the yield curve is on a downward slope?
- How will the inflation report affect the market and how can I be prepared for either outcome?
- What does this mean “A better-than-feared second-quarter earnings season sparked a rally in stocks last month as investors bet that margins could withstand inflationary pressure.”? Is it saying that earnings were what investors were expecting?
- With some moves already making about 1/3 of the total profit, should I close them? How to close them to make good earnings (should this be a question for TW support?
Top gainers
Biotechnology had the most top gainers this week (as of Tuesday).
- Pollution & Treatment Controls
- Restaurants
- Biotechnology
- Internet Content & Information
- Biotechnology
- Drug Manufacturers – Specialty & Generic
- Biotechnology
- Software – Application
- Consulting Services
- Biotechnology
Topics to research
- the Big Mac index
- the men’s underwear index