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7/1/22 Welcome Q3! It Can’t get much Worse … Could it?

News:

Markets ended their worst first half in 52 years yesterday.

The Nasdaq fell 3% in early trading. But buyers showed some resilience pushing stocks up off those early declines.

All four major indexes closed down about 1% (+/- 0.25%).

Sectors were divided again. Four advanced with Utilities lead the way higher. Seven sectors fell … Energy was the biggest loser … again.

The latest inflation measure, PCE, was released yesterday.

It showed that personal spending in May rose 6.3% year over year. The same as June.

Core PCE, which excludes fuel and food, slowed to 4.7% in May, down from 4.9% in April and 5.2% in March.

MarketWatch described the reading best with this headline … “Raging U.S. inflation is starting to cool.”

Picture Crypto bull

Bitcoin^ has slipped below $20,000 and continues to trade below that critical support level.

As investor losses mount, crypto businesses are collapsing.

  • Several exchanges have halted customer withdraws.
  • A crypto hedge fund was ordered to liquidate after losing at least $400 million.
  • Crypto lender BlockFi is being acquired “99% below [its] last private valuation.”

On the surface, the crypto outlook looks bleak … But we see the consolidation as a healthy part of the industry’s growth.

We crunched the numbers and can tell you exactly when we expect the crypto carnage to end. Click here to read that article.

Technicals:

The indexes all fell below a recent support level yesterday.

I’ve got the S&P 500 on the chart below…


SPY Daily Candles – Chart via thinkorswim

The put-to-call ratio snapped back to neutral, indicating that the bears may be getting less aggressive.

At writing, futures are trying to go positive.

I’m watching for a close above that yellow line for possible signs of bottoming.

Timing:

Today is the first day of Q3 and marks the year’s halfway point.

Headlines have quickly pointed out that it’s the market’s worst start since 1970.

We’ve been comparing 2022 to 1970 since Russia invaded Ukraine in late February.

A quick recap … In 1970:

  • Midterm Election
  • Oil/energy crisis
  • The S&P 500 fell more than 25%
  • The S&P 500 closed the year flat

We still hold out hope for a positive second half. However, the rally may not begin until Q4.

Watchlist:

*Low Float
^Open Position

*FNKO has support at $22
^CBIO has support at $1.60
CHEF has support at $38
ALT has resistance at $12
OPTN has support at $3.25, resistance at $3.90
LI has support at $38
SGEN has support at $175, resistance at $180

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