June 20th Weekly Forecast

June 20th Weekly Forecast

Stocks ended a 3rd straight weekly decline with a bounce off support of 3640 on Friday with high volatility. This was the largest weekly percentage decline since March 2020 during the Covid shutdown. There were a quite a few forecasts that were missed; Core PPI, Retail Sales, Unemployment Claims, Housing Starts, Building Permits and the only release that was relatively expected (with fingers crossed) was the fed rate hike of 75 basis points. This is the highest since 1994. Every day we will continue to hear the debate of whether this method quantitative tightening will be effective or not. Increasing the interest rates should make borrowers ease up on consumer sentiment but this won’t solve our supply chain issues. If the supply chain is dismantled, the war in Ukraine continues to threaten commodity prices, unemployment keeps rising and Covid cases continue spiking, inflation doesn’t look like it will slow down anytime soon but only time will tell. Another negative for investors is the sell off in crypto assets. Bitcoin had a 74% drop since November 2021 and 63% since the high of March 2022. Technically this is the first time BTC has closed below the weekly 200MA since March 2020. This could be a sign that BTC could be close to a bottom or for those in the anti-crypto crowd, BTC’s sell off may just be getting started.

To make sense of this, I like to look at pre covid prices. If you think about all of the liquidity each market was provided through quantitative easing and  government stimulus (fake money), you could say that 2020-2021 was all irrelevant as far as stock and commodity values. When it pertains to BTC, the high was $19,540 and the last pullback fell below the 78.60% level to $3,129 which signifies the bullish trend is coming to an end if we go by the Fibonacci sequence rules. Price bounced and then consolidated into a double top pattern before falling in March when the Covid announcement hit the markets.

So in a world without Covid, BTC should’ve fallen much deeper, at least to the support level around $3,100 but the market was saved by a large influx of liquidity from optimistic traders and investors all over the world. Fast forward to now, the entire world is in panic mode, as traders, this volatility is just what the doctor ordered after a month of consolidation (anything is better than a sideways market). My set-up here is a weekly one, price has broken the double top and is now looking to break or resist the trendline of my symmetrical triangle. Double top rules say price may drop to $3,879. The yearly support level on my traditional pivots say price could fall to $6,383. But don’t be too quick to short, the RSI is showing price is oversold already so we may see a pullback first. Patience is everything.

If you aren’t TRADING crypto then this info is irrelevant to you unless you are a crypto investor scared trying to figure out what move to make. If you haven’t sold yet, I don’t know why... the peak in November of last year should’ve been your moment to cash out on every damn thing. Hate to say it but, I told you so!

This week we have some economic news releases that may move the equity markets. Existing Home Sales on Tuesday and another Jerome speech on Wednesday and Thursday. Unemployment Claims, PMI, Home Sales and Consumer Sentiment. This week could be just as action packed as the last, investors brace yourself, traders lets eat!

 

The S&P is now officially in a bear market as the weekly chart shows a drop below the 38% level. The next support level is the 200ma which may present an opportunity for buyers to turn the market around like the bounce in December 2018 but this is a totally different environment. 

For my day-traders there may be a very risky set-up as we go down to a smaller time frame like the 4 hour, we can see a double bottom forming.

There is absolutely no reason to be looking for long positions in this market, especially without a high quality setup. You could try and capitalize off the 4hr double bottom set-up but there would have to be some significant buyer momentum flooding the market for this to play off smoothly. Joe Biden just fell flat on his face standing still on a bike... I expect the market to fall flat on its face as well. Hope you all had a Happy Father’s Day...

This guy makes it so easy, anyways...

Gold bulls woke up on the 14th and have given us a nice 38% pullback since the run up. We could catch a continuation of that this week especially if the dollar continues to show some weakness. Check out the Gold 1hr set-up and the DXY double top with divergence. Yes the interest rate hikes do add to the strength of the dollar but the unemployment rate and negative GDP does not, treasuries aren't looking too good either these days. We may see consolidation overall but you cannot ignore the set-up. 

Oil could see a bounce or break this week as well. Check out the upward trend on the 4 hour chart. Crude inventories on Thursday morning could move this market up or down. This market could also be at mercy to the dollar. Last week we saw a 8.75% drop in crude due to the dollar strength on the .75% fed rate hike. Energy markets are at mercy if we do officially go into a recession which is what the Fed wants. They say they don't but their actions speak otherwise...

So many pointing fingers out here, don't get caught up in the blame game just chart and trade. The volatility is a good thing for us. 

FedEx (NYSE:FDX) reports earnings on June 23. While the package-delivery giant has significantly outperformed the broader market in recent months, Morgan Stanley recently warned clients that it expects the company to miss consensus EPS on earnings day. Meanwhile, JPMorgan anticipates a modest EPS beat from FDX and FY23 guide that will blanket expectations. Both firms think FedEx will hold back on issuing long-term targets until the analyst day event on June 28.

Keep your eyes open, especially on Wednesday and Thursday's Fed speeches. This could give us futures traders some good movement day to day and the options traders can always take advantage of SPY and QQQ plays. For anyone who needs to reach the next level in their trading journey, please take advantage of my monthly mentorship packages and always reach out if you have questions. Happy Trading this week. Always manage your risk and focus on the highest quality set-ups, no need to risk money on anything less!

 


1 comment

  • Great weekly forecast. Important information to prepare for the trading week

    Dana Jun 20, 2022


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