10/27/2024
We have a lot of earnings on Halloween—is it going to spook the market? (I know it’s a terrible pun, but I couldn’t help myself.) This week felt a little different—what was all this red stuff on the weekly heatmap?
The rally in U.S. stocks is wobbling a little. Don’t get me wrong—we haven’t seen much selling, as people are eager to buy the dip. We have a stretch of potentially market-shaking events starting next week with corporate results from big tech, the closely watched employment report, and the U.S. election the week after next.
I’m not especially bearish; I am cautious as markets are making new all-time highs, and the Fear and Greed Index is between greed and extreme greed.
As a trader, I buy low and sell high. I’m not talking about investing—that’s more of a buy low and hold for a long time strategy.
I’m hearing a little chatter of bulls making a case that bear markets are a thing of the past, mentioning how people are forced to protect their assets from being eaten alive by inflation, so when people invest in an ETF they never sell. Please don’t listen to this. Bear markets are a normal part of market cycles. No one knows when they will come. I’m not saying go all cash—I’m simply saying what I say almost every week: BLOCK OUT THE NOISE, TRADE YOUR PLAN!
As you’ve seen in our Discord, the last two weeks I’ve put on a decent number of trades. Post-earnings put sales on gap downs are a very easy strategy and extremely profitable.
Follow my real-time updates in Discord; it’s 100% free. I don’t know of anyone else giving away trades like we do at GoodKidsTrading.com without charging.
Earnings
All eyes are turning to big tech next week. Google, Meta, Microsoft, Apple, and Amazon are set to report.
It’s not just tech: MCD (which is having an E. coli scare), ON, RCL, DHI, V, CMG, HOOD, SO, D, CVX... There are too many stocks to name, look at how long this graphic is!
Earnings overall have been really good; it shows the state of companies in the U.S. is strong. Keep in mind earnings are from the previous quarter, and the market is forward-looking. We can use this to our advantage by selling premium when a company mentions possible weakness in their forecast and letting the market overreact.
Nvidia Overtakes Apple as World's Most Valuable Company
Nvidia dethroned Apple as the world's most valuable company following a record-setting rally in the stock, powered by insatiable demand for its specialized artificial intelligence chips. Nvidia is always one of the last big names to report. Earnings aren’t until November 20th!
Weekly Review
SPY: As mentioned, we had a little more selling this week. We have a hammerish weekly candle. To put this in perspective, we are closing right where we ended two weeks ago. We're also almost 20% extended off the weekly 100 moving average.
So although we had some selling, especially on Wednesday morning, there really isn’t too much fear.
QQQ: On Friday, tech looked really strong. I saw some groups mentioning new all-time highs coming. 500 is still resistance. Things calmed down, ending the week with a doji candle of indecision, which makes sense because we have a LOT of big names reporting next week.
You know how to trade a doji right? I showed you on the chart :)
TLT: Bonds have been way more nervous than the stock market. Bond rates have actually reversed direction; it seems there is a bit more uncertainty with what the Fed is going to do on November 6th. That’s right—Jay Powell and the Federal Reserve are meeting the day after the election next week. It’s going to be wild.
We sold some puts in TLT... Lets hope my purple line plays out after the election and fed meeting in 2 weeks!
IWM: Small caps ended the week lower.
When you look at this chart, do you see how it bounced right off the weekly 10 EMA? Now you see why I like moving averages so much! If your chart doesn’t look like mine, maybe you should download my free TradingView guide!
GLD: What is this strength in gold telling us?
It’s telling me people are concerned about preserving their assets and looking for something safe. The strength continued this week; silver is also making a move, but gold is much stronger.
BTCUSD: I’m hearing lots of people mention Bitcoin is ready to break out, talking about how it’s an inflation play (which has always been the reason crypto enthusiasts have touted Bitcoin), but as you can see, it hasn’t happened so far. I see a thesis for trading this long.
VIX: We have a bullish inside week on VIX after the week before where fear pulled back.
Sorta looks like some compression here. I can’t help but think VIX will remain elevated with the economic news this week and the election the week after next.
That’s all for this week. Mr. Money Maxwell Inner Circle members have access to weekly video updates, with trade ideas, how I think about trading and investing, and access to my newest ebook Passive Trading with MrMoneyMaxwell.com – Grow Your Portfolio with Stocks Under $100. It’s $2 a week—you can’t even get a cup of Starbucks coffee for that. Join Now before I raise the price! You can't say I haven't given you a chance :)
Have a great week, a happy Halloween, and I’ll see you next week right here. Much sooner in Discord!
Happy Trading, Good Kids
– $Maxwell
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