fbpx

8/10/22 Safe Bets, Peak Inflation, & Tesla

News:

Markets ended the day lower on Tuesday ahead of the latest headline CPI inflation reading.

The Dow Jones and S&P 500 fell less than 0.5% each, while the Nasdaq and Russell 2000 declined more than 1% each.

Sector Safety

A deeper dive reveals some winners and losers.

photo of a safe
Photo by Jason Dent on Unsplash

4 of 11 sectors closed in the green. The sectors that outperformed the markets were the safer bets…

  • Energy (XLE) +1.8%
  • Utilities (XLU) +1.1%
  • Real Estate (XLRE) +0.8%
  • Financials (XLF) +0.5%

The losers were Communications (XLC), Technology (XLK), and Consumer discretionary (XLY), with losses ranging from 1% to 1.6%, respectively.

Musk Sell More Tesla

Telsa logo

A series of filings with the SEC revealed that Tesla (TSLA^) CEO Elon Musk dumped another 8 million shares of TSLA stock worth about $6 billion.

Musk took to Twitter (TWTR^) to explain the sale

“In the … event …Twitter forces this deal … it is important to avoid an emergency sale of Tesla stock.”

Technicals:

Yesterday’s selloff was of no concern as far as the technicals are concerned.

The S&P 500 is facing resistance, as you can see on the chart below (yellow line).

SPY Chart
SPY Daily Candles – Chart via thinkorswim

I see two setups.

  1. A double top as marked by the orange arrows (bearish)
  2. Inverse head and shoulders marked in blue (bullish)

The market doesn’t have to pick. We believe that’s the most likely case. Expect to see a short-term decline followed by a continuation rally.

Other indicators are neutral this morning ahead of the CPI inflation report…

Timing:

CPI report drops at 8:30 am.

  • The White House has preempted most negative economic news with some sort of downplay/excuse.
  • Yesterday and this morning, the Biden administration is silent. 

Our expectation is that inflation has peaked. This is the same conclusion we drew last month. Here’s what you need to keep in mind…

  • There are no guarantees.
  • The market’s reaction is more important than the number itself.

Watchlist:

*Low Float
^Open Position

*FAZE is on watch
*ANTX support at $1
^*NNVC support at $3
AEHR support at $15
TMDX support at $40
MYMD support at $5
TPIC on watch
COGT support at $12
SIGA support at $20-22
AERI support at $10
ALDX on watch
RYTM on watch
TCDA support at $12
YELP support at $36
MRSN support at $6
CBAY support at $3.50
CYTK support at $50
BLU support at $11

Secondary watchlist … +100m float

DVAX support at $15
ARRY resistance at $17.50
TCRT support at $1.50
FOLD support at $11.50
^GERN support at $2
GSAT support at $1.50

Leave a Comment

Your email address will not be published.