Weekly Wisdom: Eyes On AAPL and AMZN Reports

Greetings fellow traders and welcome to your August 3rd edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Now let’s get to what we’re currently seeing in these crazy markets and what we have our focus on going forward.

Taking a look back on this week, July 31 – August 4:

• We have a big day today, Thursday, with $AAPL and $AMZN set to report earnings after the close, along with many other names still set to report. $AMD had a decent report on Tuesday but guidance was a bit lackluster, causing a decent sell off on Wednesday. $AAPL has been a very important and impressive market leader for the calendar year so far, and many are expecting a slow down in iPhone sales. We’ll see if $AAPL improves their buyback to help fight the possible slowing sales. 
• On Monday, Chicago PMI came in at a slight miss of 42.8 vs 43.3 expected 
• Tuesday had a fair mix of data released with a slight miss on ISM manufacturing PMI at 46.4 vs 46.9 expected. JOLTS Job Openings were in line at 9.58M vs 9.61M expected. ISM manufacturing prices was also a miss at 42.6 vs 43.8 expected.  
• Wednesday saw a big beat in ADP non-farm employment change coming in at 324K vs 191K expected.
• Thursday’s weekly unemployment claims were in line at 227K vs 226K expected. ISM services PMI was a slight miss at 52.7 vs 53.1 expected, while factory orders m/m was a beat at 2.3% vs 2.0% expected.
• Friday, August 4 we are still set to get average hourly earnings m/m, non-farm employment change, and the unemployment rate all at 8:30 a.m. ET.

Here’s what we are eyeing next week, August 7 – 11:

Level Highlights:

• $SPX futures are still off the highs made last week up at 4634, trading down to a low of 4506 this week. We wrote here last week to keep an eye on the 4560 level for momentum support that bulls don’t want to lose or else we could see a fast move down toward the 4500 support zone, which is what we saw come to fruition this week. Markets will certainly be moving off any large $AAPL or $AMZN earnings moves, so all eyes will be on those reports later this evening. Further support below 4500, should the market get hit off the reports or any other reasons, comes first at 4450 with the 50-day moving average just below at 4441. Then 4420-4400 is another solid support zone below there. 4575-4600 should now serve as resistance on the upside for any bounces back higher.  
• $TLT has been diving lower this week as interest rates are moving higher again with the Fed raising rates and economic data / earnings reports continuing to come in better than expected. Any further deterioration in bonds / fast continued rise in interest rates should be harmful to equities and may take us lower toward 4400 support, should we see this trend continue.
• $VIX and $VVIX both traded to highs of the month in this week’s market pullback, with the $VIX trading up to a high of mid 17s and the $VVIX to a high of 102, both of which are pulling back off those levels. Market participants should now have eyes on the 15 level for $VIX, which had been resistance throughout the month of July and now may act as support going forward. Bulls want to see $VIX back below 15 sooner than later, while bears are looking for a pivot back higher above the 15 level with 20 being the next target. Likewise, bulls want to see $VVIX trade down to close its recent gap and trade back under the 90 level, while bears should look for a pivot back higher to eventually trade over 100 in a bigger way, which should accelerate downside selling in equities.

Upcoming News:

• Monday, August 7 starts off with some Fed speak beginning with FOMC member Harker speaking at 8:15 a.m. ET, followed by FOMC member Bowman at 8:30 a.m. ET. We’ll also get the update for Consumer Credit m/m at 3:00 p.m. ET.  
• Tuesday, August 8 brings us final wholesale inventories m/m at 10:00 a.m. ET.
• Wednesday, August 9 has a 10-yr bond auction that comes just after 1:00 p.m. ET.
• Thursday, August 10 is our important economic data day next week with updated inflation numbers. The CPI m/m, CPI y/y, and core CPI will all be released 8:30 a.m. ET. We’ll also see weekly unemployment claims data released at the same time. Traders are expecting a 3.0% print on CPI y/y. We’ll also have a 30-yr bond auction just after 1:00 p.m. ET.
• Friday, August 11 brings more important data with PPI and core PPI released at 8:30 a.m. ET. The University of Michigan’s consumer sentiment and inflations expectations index will be released at 10:00 a.m. ET.

Here’s Your Chart of the Week:

Via Bloomberg Finance LP, DB Asset Allocation: Markets have been holding up impressively well, partially on the back of constant upside surprises in economic data as our economy continues to push strong. However, good things don’t last forever and judging by the history of this chart, we may start to see less and less of these positive upside surprises in the coming months.

Source: https://twitter.com/WallStJesus/status/1686055058163613702/photo/1

SPY Daily Update:

$SPY trading down this week, losing the 452 momentum support which may now serve as resistance going forward on any initial up moves. We are finding some support around the 447-448 area today, providing some relief before $AAPL and $AMZN earnings reports. Further support below can be found at 445, 443, and then the 438-440 zone.

SPY Weekly Update:

$SPY weekly finally seeing some damage done after an incredible summer rally, more or less a perfect trend higher since we broke over 420 earlier this Spring. Bulls need 438 to hold on any downside action, otherwise this weekly trend threatens to be broken. For now though, we are far away from there and are just seeing some healthy corrective action in an overall uptrending market.

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-Patrick Hawe

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Patrick Hawe’s current positions:

*As of 3:30pm ET August 3, 2023

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