Last week’s market outlook:

No video market outlook as I am on the road most of the weekends until 6/15. I may be able to squeeze in a video or two based on where I am on the weekends. Here is last week’s outlook:

What was the 600 point move all about on Friday?

Even if you were hiding under a rock, you would have still noticed the massive 600 point spike in Dow Jones. And here is the best part – this happened on literally no news! The markets are full of ugly surprises like that. If you look around at forums and groups where people are doing 0DTE trades, most of them got absolutely annihilated on Friday.

Although a move like that is very annoying, and one day’s price movement like that doesn’t create a new trend, that gigantic candle still cannot be ignored especially since Dow Jones was at the bottom of its trading range which is where reversals happen. Just like I have been pointing out to our group, to not ignore the bearish engulfing candle on SPY on 5/23, don’t ignore this one too. Because if we get a follow through on Monday and Tuesday (after JOLTS), we are going back up again. 

What about the double top that was forming?

 After a failed breakout earlier in May, a double formation had started forming starting 5/20. But as I have been highlighting in my weekly updates, with all chart patterns, you need confirmation signals and with a double top, the confirmation will come only if the neckline breaks. With Dow, this didn’t happen at all so this pattern hasn’t played out. The baffling 600 point move on Friday did not happen on any material news, but we have to ready for a reversal at this point if we get a follow through on Monday and confirmation on Tuesday (after JOLTS)

RRG charts – XLE, XLU, XLB are very strong. 

DON’T GO BEARISH ON DOW STOCKS (at least the leaders)
Leaders:CEG, PXD, XOM, COP, EOG, HES, APD
Laggards:SHW, PPG, PKG, MLM, NUE

Interestingly enough XLY, XLK are still looking weak. And for the markets to make new highs, we absolutely need tech and consumer discretionary (i.e market’s “RISK ON SENTIMENT”) to participate, otherwise we are just going sideways from here.

LOOK FOR BEARISH SETUPS ON XLRE, XLY, XLV, XLK (preferably on the laggards)

Leaders: MU, NTAP, NXPI, TXN, ADI, ORCL, AAPL, PANW, QCOM (I know, I know, I have bearish trade on this one)
Laggards: INTC, ADBE, ACN, ADSK, AMD, CRM, IBM, NOW, INTU, MSFT, ANET, LRCX, AVGO, KLAC, AMAT, NVDA

Important Macro Events 

  • Next week is full of jobs related data and all these are significant and market moving events. So, expect a lot of wild moves in the markets. 
  • JOLTS is the most expansive of all the data and that is why I have highlighted it. JOLTS will set the mood for the markets starting tuesday and we will find out if the 600 point move on Dow was an anomaly or are the big institutions aware of something that the common man isn’t.

EARNINGS: CRWD, DLTR, LULU

Not much going on in earnings next week. CRWD will have some effect on Nasdaq for sure, but outside of that it is a dead earnings week.