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9/12/22 On the Defense … Putin & The Bears

News:

Friday belonged to the bulls.

All four indexes posted significant gains…

  • Dow Jones +1.2%
  • Nasdaq +2.1%
  • S&P 500 +1.5%
  • Russell 2000 +1.9%

The strongest correlation to the market advance was that of the Ukrainian military.

Photo of Ukrainian soldiers hold a up flag in front of building with Russian flag on the ground
Image from Pravda

Zelensky Gets Offense

Over the past week…

A recent CNN article has linked the Ukrainian advance to the market gains.

While anything is possible … Both advances appear to be in shaking ground.

Our take: 

  • The market doesn’t need Ukraine … Ukraine needs a strong market.
  • Bettering market conditions mean western government support is less likely to encounter strong opposition.

Sector Round-Up

All 11 sectors finished higher on Friday.

The heaviest buying was focused on…

  • Communications (XLC) +2.8%
  • Energy (XLE) +2.5%

The weakest advance… 

  • Utilities (XLU) +0.4%

Headline RoundUp

Robinhood launched an investor index tracking its user’s top holdings, “weighted by … conviction.”

At writing, the top five are…

  1. Tesla (TSLA^)
  2. Apple (AAPL)
  3. Amazon (AMZN)
  4. Ford (F)
  5. AMC Entertainment (AMC^)

Bitcoin^ is holdings its gains. 

  • This morning 1 Bitcoin will cost you about $22,250, up nearly 20% from last Wednesday’s low. 
  • The buying was spurred by headlines that the Biden administration is considering a mining ban.
  • Our stance hasn’t changed … This is a buying opportunity.

DocuSign (DOCU) popped 11% on Friday…

  • The software company posted better than expected earnings and a higher forecast.
  • The stock is down 78% from last year’s highs.

Technicals:

There’s rising support, and Windows are hard to close (orange arrow). 

But there’s still resistance in play…

SPY chart with support, resistance, and a window marked.
SPY Daily Candles – Chart via thinkorswim

The SPY is clearly looking bullish, but the day-to-day is unclear.

Our signals provide little additional guidance today…

Timing:

When the market falls on a Friday and again on Monday, it often marks an inflection point.

But 2022 is different.

This “rare” event has occurred 12 times this year.

Last weekend (Labor Day) was the 3rd in a row. But Friday broke the streak.

Here’s a chart from our friends at Stock Trader’s Almanac that provides some indication of what might be to come.

Chart comparing various scenarios after the Down Monday / Down Friday streak end.

History tells us further downside is possible … but likely limited.

We’ll have close eyes on today’s close.

Our take…

  • The market has likely already bottomed.
  • We expect a strong rally in Q4, a positive close today will add to our case.

This morning futures are on the rise.

Tomorrow we’ll get the latest CPI inflation data.

Watchlist:

*Low Float
^Open Position

*APRN resistance at $8, support at $7
IMRA support at $2
SPWR support at $27
AGIO support at $32
RVNC on watch
SEEL support at $1.20
ISEE support at $17
^GEO support at $8, resistance at $9
ARDX support at $1.20. Resistance at $1.40
PGEN support at $2.60
TCRT on watch
RUN resistance at $26
^GERN support at $2.50, resistance at $2.80 (we’ve taken half profits)
TAL support at $5

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