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8/1/22 Bear Squeeze Engaged

News:

July is officially in the record books. And investors have reason to celebrate…


Photo by Rakicevic Nenad from Pexels

Stocks ended on a positive note, with gains ranging from 0.7% for the Russell 2000 to 1.9% for the Nasdaq.

It was the best monthly performance since 2020. It was the best July for stocks since 1939. Here are the totals for the month:

  • Dow Jones +6.7%
  • Nasdaq +12.3%
  • S&P 500 +9.3%

Energy Leads

Friday’s top performing sector was Energy (XLE) which logged a gain of more than 4%.


Photo by Erik Mclean on Unsplash

Several big oil companies reported earnings last week. 

NBC News totaled the profits from  “ExxonMobil, Chevron, and Shell.” Combined, the three posted “$46 billion in earnings for the second quarter.”

On Friday, buyers snatched up as many shares as they could…

  • Shell (SHEL) +3.7%
  • Exxon Mobil (XOM) +4.6%
  • Chevron Corporation (CVX) +8.9%

A Weak Spot

Not all stocks have enjoyed the gains.

On Friday, Roku (ROKU) stock dropped more than 23% after reporting earnings best described as “frankly awful.”

The Squeezes Heard Round the World

Last week the biggest story the financial media didn’t cover was the short squeezes.

Several stocks logged ridiculous gains as bears got slaughtered trying to bet against rallies.

These stocks all made our watchlist early on…

  • Mobile Global Esports (MGAM^) +179%, 1 day
  • Pagaya Technologies (PGY) +920%, 2 weeks
  • AMTD Digital (HKD) +2,550%, 7 days

Technicals:

The markets are facing stiff resistance this morning.

RSI levels (see the circles) are overbought.


QQQ Daily Candles – Chart via thinkorswim

  • The VIX continued to fall, which is bullish.
  • The put-to-call ratio is neutral

Today, our reading is mixed. The market is due for a pullback but offers no good risk-to-reward bets.

And with the shorts getting squeezed, I’m happy to wait for better opportunities on the bull side.

Timing:

Since 1988 August has been the worst month for stocks.

While July proved monthly records don’t always matter were approaching the month with caution.

Here are the events we’re keeping a close eye on…

  • August 5, Employment Situation Report
  • August 10, CPI inflation data
  • August 12, Univ of Michigan Consumer Sentiment
  • August 17, FOMC minutes release
  • August 25, Final Q2 GDP report

Watchlist:

*Low Float
^Open Position

*MGAM is on watch
*JAKK is on watch
*FAZE has support at $13
*HKD is on watch
ECBK is on watch
MAXN has support at $15
SMR has support at $13
^CBIO has resistance at $1.80
TH has resistance at $14
PBTS has resistance at $1.50
PGY is on watch
SIGA has support at $15
AXTI has support at $8
CELH support at $80
RYTM has support at $12
NCNA has resistance at $2
GETY is on watch
VUZI has support at $7.50
FSLR is on watch
ENPH is on watch
EDU has support at $25
ARRY has support at $15
CSGP has support at $70
PLUG has support at $20

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