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7/5/22 Manufacturing Slows, Signals are Mixed, & It’s July

News:

Welcome back from the long weekend!

On Friday, markets ended a choppy day with a rally. All four indexes closed the day up about 1%.

Each of the 11 sectors closed positive too. Utilities was the best performer, followed by Consumer Discretionary … Technology came in last but still green.


Photo by Kateryna Babaieva from Pexels

One piece of notable economic data came from the ISM Manufacturing report:

  • Activity grew for a 25th consecutive month
  • But the reading was the “lowest … since June 2020.”
  • Your takeaway … manufacturing activity is slowing.

The victims of the crypto crash continue to pile up…

Over the weekend, markets were given something to look forward to … According to “people familiar with the situation … President Biden is expected to roll back some tariffs on Chinese imports soon.”

Futures this morning slipped from green to red. At writing, markets are pointing to a negative open.

Technicals:

Indicators were mostly neutral after Friday’s close.

The put-to-call ratio and RSI levels provided no signals one way or another.

On Friday, we specified a resistance level near $380 for the SPY. The index did close above that key level … but not in a meaningful way.

And the VIX is still not breaking down, as you can see in today’s chart…


VIX Daily Candles – Chart via thinkorswim

The ascending wedge forming points to strength for the bears.

If the VIX breaks down below 25. Or, if the market stages a rally today, our bear theory will be invalidated.

Timing:

The four-day week could still bring some strong action…

  • The market is subject to elevated volatility after the July 4th holiday
  • June’s FOMC minutes will be released on Wednesday
  • The June jobs report drops on Friday

Remember, July is traditionally the strongest of the summer months … But summer rallies are historically the weakest rallies.

Watchlist:

*Low Float
^Open Position

*TOUR has resistance at $1.40
*FNKO has support at $22
^CBIO has support at $1.60
CHEF has support at $38
ALT has resistance at $12, support at $11
OPTN has support at $3.25, resistance at $4-ish
LI has support at $37.50
CD has support at $8
SGEN has resistance at $180

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