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- Next week will bear close watching…
Next week will bear close watching…
Julio Leon Andrade
April 14, 2024
The relentless rally in stocks since the October lows has seemingly ended in what's supposed to be the strongest month of the year.
Closing an extremely volatile week fraught with geopolitical risk, the S&P 500 ended roughly 100 points lower while the dollar and yields continued to rise.
Notably, the S&P 500 has broken below its annual trendline but is it over?
Let me get you ready so that you can trade at your best this next week…
First of all, I hope you made a lot of profits last week.
Let’s begin with the BEST information to get you started.
I’ll divide it in:
Market outlook
Geopolitical Risks
Earnings
Economic Outlook
Market Outlook
STOCK TO WATCH 👀:
AAPL (Apple)
Noteable stand out on Mac refresh with new AI chips.
Gold/Silver (GLD/SLV)
Hit new 52 week highs in Friday's session amid peak geopolitical tensions but closed in the red for the day.
Action:
Time to take some profit in near term winners like GLD/SLV and reallocate to areas in the market like AAPL (Apple) that have already pulled back but will stand the test of time.
As for the broader index, SPY has seemingly lost its annual trendline but all is NOT lost.
IF the index can reclaim it's 20-day simple moving average then we will quickly be right back to where we were.
For now, we're currently testing the 50-day simple moving average for the first time since November 2023 so you would think a bounce would be more likely than not...
Geopolitical Risks
While this is a real risk, I’m not one to take action in the defense sector as these trades have rarely held in the recent years. I would, on the other hand, expect weakness in travel and spending moving forward as tensions remain.
We will cover the conflict cupboard in Monday's trade plan but what I can tell you now is there is a large divergence between gold and bonds that sets up very well for a long TLT trade. With the market nearly pricing out rate cuts this year and bonds firmly in the conflict cupboard, the risk/reward here and now for a long position in TLT is ideal.
Retail has also been especially weak and we've been seeing some recent rotation out of some big winners this year, notably ANF (Abercrombie & Fitch) and DKS (Dicks Sporting Goods).
This trend could extend to credit card companies but we would focus on a name like MA (Mastercard) notably losing its 50-day simple moving average this week as opposed to an AXP (American Express) who has earnings on deck Friday before the open.
Earnings
Big tech earnings kicks off with NFLX (Netflix) on Thursday after the close.
Expectations are high having received multiple upgrades ahead of the print...
One to watch will be SLG (SL Green Realty) with all the talk about commercial real estate companies running at such low capacities that they're no longer able to service their debt, this best of breed operator will tell the story for the broader complex.
SLB (Schlumberger NV) will be another stand out for us.
A current position in the Paper Gains portfolio, this best of breed oil services titan has recently announced an agreement to acquire ChampionX.
One last notable will be JNJ; this one is setting up well for a “better than feared” earnings reaction. In addition, healthcare has been hit pretty hard as a whole and with tensions on the rise, this defensive sector may be seen as a safe haven for market participants providing additional upside.
Economic Outlook
Very light economic calendar this week aside from 6 FED speeches.
With no market moving data points until next weeks PCE, on Friday the market should be free to focus on earnings this week.
Now, I have something for you…
Every Monday at 12:00 AM EST I do a livestream going through my Weekly Trade Plan for the week…
Explaining in depth charts, analysis, and news to prepare for next week’s trades…
Join us only if you want to make it a profitable week.
See you tomorrow 😎
Rooting for you,
Paper Gains.
P.S. On Wednesday I’ll be sharing with you all you need to know about Bitcoin’s halving.