Big Tech Earnings Begins! Market On Open - Wednesday 24 July
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Google Good, Down, Tesla Bad, Down
by Alex King
Repeat after me - stock prices aren’t driven by earnings, at least not in the near term. If large account players are planning to sell stocks, they will sell them, regardless of what Google or Tesla or Microsoft or Apple or anyone else may print on any given quarter. Right now we have I think some technical weakness in equities (translated - stuff is selling off for “no reason”) which to my mind is simply a little de-risking into the election. Markets aren’t dropping through the floor, it’s not a run-for-the-hills moment, but I think it is a be-careful moment. That’s true for short positions as well as long positions. Why? Because I think we remain in a bull market, and because the nature of market selloffs tends to be that when the bottom is found, the reversal is savage to the upside. Which is why so often, religious-bears are often punished so badly. If you are going to own short hedges, or be net-short, in a bull market? Then I think you have to be careful. Personally I treat short profits as ephemeral in bull markets and I try to bank them often. I am nervous as unrealized short losses climb because it’s a statement of fact to say that short positions in US equity indices simply just get left behind, never to be revisited again. Speaking personally I have hedged my $TQQQ position to ride out the current volatility, and I have modest short Nasdaq and S&P positions in long term accounts. I think we may see some more weakness into August so for now I am holding onto my shorts. With a suitable degree of nervousness it has to be said. (Inner Circle subscribers will, of course, receive trade disclosure alerts before I sell those positions).
As always, it pays to react to price, not to anticipate it; but in my view it helps to have a map with which to navigate and to know which way to turn as events unfold. The charts we post here in the daily Market On Open note, available to any paying subscriber, are in my view a useful way of orienting oneself and understanding likely reversal, support and resistance levels in both the short and long term.
If you'd like real-time real-money trade disclosure alerts and a live ask-us-anything webinar each week, sign up for our Inner Circle service - consider doing so in July before prices rise 1 August. You can join up here.
Remember, one week to go before prices rise.
So Let’s Get To Work
As always in our market notes, we deal with long- and short-term charts covering the main US equity indices - that’s the S&P500, Nasdaq-100, Dow Jones-30, and the Russell 2000 - plus bonds, volatility, oil, and key sector ETFs. You can use these daily notes to help you navigate long-term investments, and/or to help you action short-term trading. Any paid-tier subscription here gets you these notes every trading day.