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7/28/22 Winner Winner Chicken Dinner

News:

It was hard to find a loser yesterday.

The market opened up higher after getting better than expected durable goods orders.

Earnings For the Bulls

On a big earnings day, buyers pushed select stocks higher. Some notable winners from yesterday include:

  • Chipotle Mexican Grill (CMG) +15%
  • PayPal (PYPL) +12%
  • Spotify (SPOT) +12%
  • Alphabet (GOOG, GOOGL) +8%
  • Microsoft (MSFT) +7%

Interest Rate Hike

The major indexes were trading at their highs when The Fed announced a 75 basis point rate hike yesterday afternoon. 

Federal Reserve Logo

The market digested the news and pushed higher into the close.

The closing numbers were big too…

Fed Chair Powell addressed reporters after the rate hike and said…

  • “I do not think the U.S. is currently in a recession.”
  • “Too many areas of the economy that are performing too well.”
  • We continue to see a “very strong labor market.”

Airline Update

Spirit (SAVE) and Frontier (ULCC) formally ended their merger agreement yesterday.


Photo by Joe Cavaretta from the Sun Sentinal

But talks between Spirit and Jetblue (JBLU) continue… 

The Wall Street Journal reported the two airlines are nearing a deal that could be announced as soon as today.

  • SAVE gained 4% yesterday and is up another 5% in pre-market trading.
  • ULCC gained more than 6% following the breakup.
  • JBLU is up about 4%

Technicals:

After a breakout in a bull market, resistance typically becomes support.

Now check the S&P 500’s chart…


SPY Daily Candles – Chart via thinkorswim

It’s a textbook breakout with a support test and a move higher. It doesn’t get much prettier than that!

In our opinion, the market is clearly pointing higher.

The VIX maintains its bullish stance below 25.

But the Put-to-call ratio is oversold this morning. So more traders are betting against the current rally than are betting on it.

Our outlook remains bullish.

But we’ll continue to monitor all these levels closely.

Timing:

At 8:30 this morning, The Bureau of Economic Analysis will release the preliminary Q2 GDP numbers.

Q1 saw a contraction.

Some consider a recession two quarterly contractions…

Don’t get hung up on the headlines this morning. Watch to see how the market reacts.

I’ll leave with a few more words from Fed Chair Powell … “take first GDP reports with a grain of salt.”

Watchlist:

*Low Float
^Open Position

*HKD is on watch
SMR has support at $13
^CBIO has resistance at $1.80
TH has support at $13, resistance at $14
PBTS has resistance at $1.50
PGY is on watch
SIGA has support at $16
CELH support at $80
NCNA has resistance at $2
VUZI has support at $7.50
ENPH is on watch
CSGP has resistance at $70

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