Stocks are facing their first signs of adversity of the year, as all major indices declined during the week. In fact, they struggled to catch a bid, as they ended the week on a 5-day losing skid.
Furthermore, the Dow Transport index has now dropped for 11-straight trading sessions… making it the longest streak since 1972.
Now, remember, we had two straight months of buying pressure to start 2019, which turned out to be the best start for the S&P 500 since 1991. It shouldn’t come as a shock to see stocks sell-off.
That said, how many people actually put their money where their mouth is and made money on this year’s first sell-off?
(You don’t need a lot of capital to make money with options if you don’t know where to get started on learning the basics, click here.)
In fact, on Friday, I was in rare form… hitting 100% winner after another.
(There is a safe and simple way to make money on stocks and ETFs when prices start dropping, if you’d like to know how I pull in winners like this one, click here. )
Now, I’m studying market volatility, reading through economic reports, and following what the Fed is saying about interest rates and the overall health of the economy. I do it… because it gives me a big-picture view on market sentiment.
That said, recent market weakness can be attributed to one or the following factors:
- S&P 500 hit key resistance and failed around the 2800 level
- ECB lowered its economic growth outlook
- Brexit fears
- Weak export numbers out of China
- Weak job numbers out of the U.S.
- Trade negotiations between the U.S. and China remain unresolved
That said, you could even see some stocks breaking down, which added fuel to the fire. And something I alerted Weekly Money Multiplier subscribers during the week.
(I update my clients in real-time about my trades via text and email, if ready to become a WMM client, click here.)
Now, if you’d like to hear more about my current trades, how I am positioned, my current thoughts on the market, as well as, the weekly earnings and economic calendar… read on.
Jump on the Week
There’s a lot to focus on macro wise.
Federal Reserve Chair Jerome Powell noted that the Federal Open Market Committee (FOMC) is in no hurry to hike interest rates due to slow economic growth and muted inflation.
However, the Fed has stated it would announce new details for its balance sheet plans soon.
This has been one of the main focuses because the Fed has been lettinga considerable amount of securities roll off its balance sheet.
That said, we’re going to wait and see what the Fed will do with its $4T balance sheet.
The Fed has a lot on its plate…
My thinking is the Fed would pause its “selling” of securities on the balance sheet… because if they don’t, it would spook the markets.
Here’s a look at how much the Fed has on its balance sheet currently.
The Fed may be looking to stop its normalization program due to a number of reasons.
Reasons for the Fed to take a step back
-
- Slow growth rates in China
- Depressing February U.S. employment report – even though the Fed has been saying the labor market looks favorable.
- U.S. stocks falling more than 2% last week – the SPDR S&P 500 ETF (SPY) fell 2.13%, SPDR Dow Jones Industrial Average ETF (DIA) fell 2.19%, and the iShares Russell 2000 ETF (IWM) fell 4.17%. While, the Invesco QQQ Trust (QQQ) fell 1.85%.Despite the QQQ falling just 1.85%, I was still able to double my money using options.
- Inflation has been low – but the FOMC isn’t changing their 2% inflation target rate.
- Fears of a no-deal policy between the European Union and the U.K.
Over the long term, low inflation coupled with low-interest rates would make it difficult for the FOMC to prevent recessions… so it’ll be interesting to see what solution the Fed comes up with. No matter their plan… I’ll be ready to strike whenever I see my money pattern come up, just as I did with the QQQ trade.
With stocks setting up for a potential crash, we may see the smart money take some risk off the table… but what will they do with that money?
They’ll probably look to get on the defensive and rotate into bonds and bond exchange-traded funds (ETFs) like the iShares 20+ Year Treasury ETF (TLT).
That being said, I’m expecting volatility to pick up a bit after last week’s price action.
What I’m focused on for the coming week
Now, there is a slew of economic data being released this week… and companies are still reporting earnings – Adobe Systems (ADBE), Stitch Fix (SFIX), Broadcom Limited (AVGO), and Oracle (ORCL) are reporting this week.
Let’s see what I’m watching this week.
Economic and Earnings Calendar
Monday, March 11, 2019
Economic Calendar
- 8:30 AM EST Retail Sales
- 10:00 AM EST Business Inventories
Earnings Calendar
Earnings Before the Open
- No notable earnings
Earnings After the Close
- ADT Inc. (ADT) implying 9.49% move, historical average move 9.97%.
- Coupa Software (COUP) implying 12.64% move, historical average move 15.27%.
- Stitch Fix (SFIX) implying 15.36% move.
Other Catalyst Events
- Cowen Annual Healthcare Conference, March 11-13
- Deutsche Bank Media & Telecom Conference, March 11-13
Tuesday, March 12, 2019
Economic Calendar
- 6:00 AM EST NFIB Small Business Optimism
- 7:45 AM EST ICSC Weekly Retail Sales
- 8:30 AM EST Consumer Price Index
- 4:30 PM EST API Weekly Inventory Data
Earnings Calendar
Earnings Before the Open
- Dick’s Sporting Goods (DKS) implying 10.78% move, historical average move 13.36%.
- Momo Inc. (MOMO) implying 12.57% move, historical average move 14.86%.
Earnings After the Close
- Cohu Inc. (COHU) implying 9.36% move, historical average move 14.19%.
Other Catalyst Events
- Barclay’s Global Healthcare Conference, March 12 – 14
- Cowen Annual Healthcare Conference, March 11-13
- Deutsche Bank Media & Telecom Conference, March 11-13
- Susquehanna Annual Technology Conference
Wednesday, March 13, 2019
Economic Calendar
- 7:00 AM EST MBA Mortgage Applications Data
- 8:30 AM EST Producer Price Index
- 8:30 AM EST Durable Goods Orders
- 10:00 AM EST Construction Spending
- 10:30 AM EST Weekly DOE Inventory Data
Earnings Calendar
Earnings Before the Open
- Express Inc. (EXPR) implying 13.91% move, historical average move 15.61%.
- DAQO New Energy (DQ) implying 12.44% move, historical average move 13.48%.
Earnings After the Close
- Tailored Brands (TLRD) implying 17.60% move, historical average move 19.17%.
Other Catalyst Events
- Barclay’s Global Healthcare Conference, March 12 – 14
- Cowen Annual Healthcare Conference, March 11-13
- Deutsche Bank Media & Telecom Conference, March 11-13
- William Blair Annual Technology Conference
Thursday, March 14, 2019
Economic Calendar
- 8:30 AM EST Weekly Jobless Claims
- 8:30 AM EST Continuing Claims
- 8:30 AM EST Import Prices
- 10:00 AM EST New Home Sales
- 10:30 AM EST Weekly EIA Natural Gas Inventory Data
Earnings Calendar
Earnings Before the Open
- Dollar General (DG) implied move 6.07%, historical average move 6.76%.
- Embraer-Empresa Brasileira de Aeronautica (ERJ) implied move 4.67%, historical average move 4.17%.
- Revlon Inc. (REV) implied move 16.62%, historical average move 15.2%.
Earnings After the Close
- Adobe Systems (ADBE) implying 5.52% move, historical average move 4.77%.
- Broadcom (AVGO) implying 5.34% move, historical average move 5.68%.
- Oracle Corp. (ORCL) implying 5.14% move, historical average move 7.95%.
- Jabil Inc. (JBL) implying 6.96% move, historical average move 7.94%.
- Ulta Beauty (ULTA) implying 7.80% move, historical average move 8.53%.
Friday, March 15, 2019
Economic Calendar
- 8:30 AM EST Empire Manufacturing
- 9:15 AM EST Industrial Production
- 10:00 AM EST JOLTs Job openings
- 4:00 PM EST Net Long-term TIC Flows
Earnings Calendar
- No notable earnings.
Source: WeeklyMoneyMultiplier.com | Original Link
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