Stocks closed in the green on Friday in what was a wild week of volatility in the market. Of course, the big story during the week was tariffs. And on Friday, the U.S. slapped tariffs on $200B worth of Chinese goods.
However, the market caught a late rally after President Trump said that his relationship with President XI is strong, and that talks with China will continue in the future. In fact, he even said that he would be willing to remove the current tariffs depending on how negotiations move in the future.
In other words, most investors are in a “wait and see mode”…
However, I’m able to take advantage of sudden shocks in volatility because I’m actively trading this market…
During the week I was able to profit taking long and short positions…
You see, stocks are reacting to headlines which means you have to be nimble and take your profits fast because sentiment and trend can change quickly.
For example, earlier this week I was cashing in on SPY puts
(My clients receive my trade ideas in advance and alerts in real-time, via phone and email, if you’d like to start receiving them click here.)
Thank you…next.
And while many were expecting a crash when the tariffs hit on Friday, I was waiting for my SPY calls to pay off… and they did!
(A lot of people were surprised we closed higher on Friday, can’t say I was… You think my alerts can help you? Click here to get them.)
Not too shabby right?
(WMM is the closest thing to looking over my shoulder and watching me trade, join today)
However, it’s now time to look forward to the week ahead…
But first, a bit of trading advice for this current market:
- Size your trades smaller.
- Be quick to take profits and cut losses.
During the week, the VIX, the market’s fear index, soared above 20, its highest levels since January. While it closed at 16 on Friday, it has gotten my attention.
So of course, I’m watching volatility… but I’m also looking at the upcoming calendar, earnings, and IPOs for potential catalysts and trade ideas.
Contents
Jump on the Week
The market had a major reversal on Friday with the S&P 500 closing up 0.4% after being down as much as 1.6%… however, stocks closed the week lower.
Even though the POTUS fueled volatility after he noted there was no need to rush into a deal… after the tariff rate on $200B of Chinese imports was raised to 25% (from 10%) early Friday. Not only that, the POTUS added the U.S. was working on another tariff rate raise on $325B of Chinese imports.
Now, the uncertainty in the trade deal prompted a market selloff with traders trying to de-risk their portfolios. However, when Treasury Secretary Steven Mnuchin commented on the trade talks, noting they were “constructive”… and China’s Vice Premier saying they went “fairly well”, selling pressure subsided.
I actually got long the market on Friday…
Here’s the chart I was watching.
Notice how SPY filled the gap up from April, and held that level just above $282. Not only that, the blue line looks like its turning higher and setting up for a bullish crossover (blue line crossing above the red line).
Additionally, the $VIX was coming back down, after breaking above 20.
Now, when you see $VIX coming in with the SPDR S&P 500 ETF (SPY) catching a bid… it’s usually a good sign to go long the market (something I mentioned to Weekly Money Multiplier clients).
(Weekly Money Multiplier clients were able to stream my live portfolio and see this trade… if you want to see trades like this in real time, click here to get started.)
Moving on.
On Friday, Uber Technologies Inc. (UBER) finally conducted its initial public offering (IPO). If you bought shares at the open… well, you would’ve lost money (even though IPOs tend to close higher).
I gave my clients a heads up about the IPO. It was valued at around $75.5B and priced at the low-end of the range at $45 (the IPO price range was between $44 and $50). With $3B in annual losses and no clear path in sight to profits… that let us know to stay away from the trade.
With trade talks still going on, some volatility back in the air, and the lack of buyers during UBER’s debut… I feel like we could be in the late innings of the historic bull market. That said, this is the time to tread lightly, focus on patterns that have been working, and waiting for a clear direction.
Right now, in order to reach a trade deal agreement, China wants the U.S. to remove all extra tariffs and set targets for Chinese goods in line with actual demand. Additionally, the deal should remain balanced. So until we see both sides decide on a solution, I’m not looking for any new swing trades in the market.
For the most part, I’m staying stock specific and focusing on the macro view, as well as corporate earnings.
Now, let’s take a look at what’s on the docket for economic indicators and corporate earnings this week.
Economic Calendar
Monday, May 13, 2019
- No notable economic indicators.
Tuesday, May 14, 2019
- NFIB Small Business Optimism Index at 6:00 AM ET.
- Import and Export Prices at 8:30 AM ET.
Wednesday, May 15, 2019
- MBA Mortgage Applications at 7:00 AM ET.
- Retail Sales at 8:30 AM ET.
- Empire State Manufacturing Survey at 8:30 AM ET.
- Industrial Production at 9:15 AM ET.
- Business Inventories at 10:00 AM ET.
- Housing Market Index at 10:00 AM ET.
- EIA Petroleum Status Report at 10:30 AM ET.
- Treasury International Capital at 4:00 PM ET.
Thursday, May 16, 2019
- Housing Starts at 8:30 AM ET.
- Jobless Claims at 8:30 AM ET.
- Philadelphia Fed Business Outlook Survey at 8:30 AM ET.
- EIA Natural Gas Report at 10:30 AM ET.
- Fed Balance Sheet at 4:30 PM ET.
Friday, May 17, 2019
- Consumer Sentiment at 10:00 AM ET.
Earnings Calendar
Monday, May 13, 2019
Earnings Before Open
- No notable earnings.
Earnings After Close
- BiliBili Inc. (BILI) implying 13.01% move.
- Tencent Music Entertainment (TME) implying 10.36% move.
Tuesday, May 14, 2019
Earnings Before Open
- Ralph Lauren (RL) implying 8.63% move. Historical average move 9.89%.
- CyberArk (CYBR) implying 10.70% move. Historical average move 12.12%.
- AZZ Inc. (AZZ) implying 8.52% move. Historical average move 9.54%.
- GDS Holdings Limited (GDS) implying 9.67% move. Historical average move 7.92%.
Earnings After Close
- Agilent Technologies (A) implying 5.30% move. Historical average move 6.36%.
- 8×8 Inc (EGHT) implying 10.51% move. Historical average move 14.62%.
- Tilray (TLRY) implying 12.80% move.
- Aurora Cannabis Inc. (ACB) implying 10.78% move.
Wednesday, May 15, 2019
Earnings Before Open
- Alibaba (BABA) implying 7.28% move. Historical average move 4.96%.
- Embraer SA (ERJ) implying 5.73% move. Historical average move 3.92%.
- Macy’s Inc. (M) implying 10.53% move. Historical average move 12.01%.
Earnings After Close
- Cisco Systems Inc. (CSCO) implying 5.29% move. Historical average move 6.27%.
- Netease.com Inc. (NTES) implying 9.21% move. Historical average move 8.55%.
- ZTO Express (ZTO) implying 6.81% move. Historical average move 6.89%.
- Flowers Foods Inc. (FLO) implying 6.13% move. Historical average move 5.73%.
- Farfetch (FTCH) implying 13.02% move.
Thursday, May 16, 2019
Earnings Before Open
- Walmart Inc. (WMT) implying 4.69% move. Historical average move 6.07%.
- NICE Systems (NICE) implying 4.94% move. Historical average move 4.25%.
- Wix.com (WIX) implying 9.70% move. Historical average move 12.11%.
Earnings After Close
- Applied Materials Inc. (AMAT) implying 6.94% move. Historical average move 6.51%.
- Baidu.com Inc. (BIDU) implying 6.57% move. Historical average move 7.49%.
- NVIDIA Corp. (NVDA) implying 9.84% move. Historical average move 9.63%.
- iQIYI (IQ) implying 11.72% move.
- Pinterest Inc. (PINS) implying 13.57% move.
Friday, May 17, 2019
Earnings Before Open
- Deere & Company (DE) implying 6.27% move. Historical average move 5.86%.
IPO Watch
- ConversionPoint Holdings Inc. (CPTI) expected to price $6 – $7, offering 6.15M shares. IPO date: Tuesday, May 14, 2019.
- Avantor Inc. (AVTR) expected to price $18 – $21 per share, offering 154M shares. IPO date: Friday, May 17, 2019.
- Fastly Inc (FSLY) expected to price $14 – $16, offering 11.25M shares. IPO date: Friday, May 17, 2019.
- Luckin Coffee Inc. (LK) expected to price $15 – $17, offering 30M shares. IPO date: Friday, May 17, 2019.
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