Despite a short trading week (4 days), there was plenty of damage done to stocks by Friday’s close. That said, the S&P 500 posted its first monthly loss of the year, and the Dow Industrial’s has now declined for six straight weeks.
We went from having fears of a trade war into being in one. President Trump isn’t only eyeing China, but also wants to impose tariffs on Mexico too now.
Trying to guess what politicians will do is not a viable trading strategy in my opinion. Therefore, like the Fed, I like to be data dependent.
And what are the numbers telling me?
Investors are scared…
…they are piling into treasuries…the yield on the 10-year T-note is at 20-month lows.
But that’s not all.
When you look at significant macro indicators like the price of oil, it doesn’t look good either. For example, crude oil prices got slashed by 16% in May… a sign of a weaker outlook for the global economy.
Now, as bleak as all of this may sound… it’s okay.
As an options trader, I’m able to take advantage of several different types of market scenarios. In fact, if stocks start crashing, I plan to make a small fortune in the process.
After all, I’ve been eyeing the S&P 500, and preparing for a potential blood bath. I tried warning you about two weeks ago and even pointed you to the Death Line.
(I warned clients on May 23 about a potential Death Line cross, and then I showed them how to profit off it. If you’d like to know more about becoming a client then click here)
Now, I’m not one of those people who like to say, I told you so… but I will say to you this…
I made almost $40K in trading profits on Friday from Death Line profits…
(It’s one thing to call the move… it’s another thing to profit from it. Not receiving my alerts in real-time? Then click here to join now)
That said, I’m looking forward to trading next week, as there are plenty of earnings, IPOs, and catalysts to discuss… along with my current thoughts on the market, and potential trade ideas.
Table of Contents
Jump on the Week – Death Line Broken
Well… I don’t like to say I told you so… but do you remember the Death Line I was telling you about and how we needed to keep it on the radar?
The SPDR S&P 500 ETF (SPY) broke below that last week, and we saw some selling pressure.
Heck, there were two levels to watch after that…
Well, look at the chart in SPY from the other day.
Look at that same chart, now updated.
Right to the area where I said was the next line of defense.
What could you have done with this information?
It’s simple… if you thought SPY could’ve bounced off that levels cause there would be bulls buying the dip. You could’ve bought at-the-money calls (ATM)… and shortly after you would’ve been sitting in some profits… and set a stop-loss if SPY broke below that green line.
What happens if you were bearish?
You could wait to see whether SPY closes below that… because if it does get a close below $275… look out below, the next line of defense is quite a ways away.
That said, I think the next Death Line could be right around $275… and I’ll be watching this level very closely. If I decide to make any moves, I’ll be sure to let my clients know about them through real-time text and detailed email alerts… as well as a live-streaming portfolio.
Now, I’m also looking at the PowerShares QQQ Trust (QQQ) – the tech exchange-traded fund (ETF).
Here’s a look at the chart:
I’ll be keeping an eye around $173 for QQQ. Now, I actually traded options on QQQ the other day… and alerted clients about it.
(If you want to receive alerts like these in real-time, click here to get started)
Here’s a look at what those options did the morning after I bought those QQQ puts.
I also bought QQQ puts that have expired…
(Triple-digit winners are possible even during market selloffs, if you want to learn how to profit when stocks are crashing, watch this video now)
Now, you could do all the analysis you want on the trade war, politics, what have you… but you need to pair it with something. My charts (the Death Line) and the money pattern, as well as analyzing the macro view have been helping my PnL remain green during this market selloff.
If you’re interested in learning how I’m able to spot stock selloffs, make sure to check out this video lesson here.
Last week, we saw the market get a slight bid with GDP numbers slightly beating estimates. However, the POTUS surprisingly announced a tariff hike on all imported goods from Mexico starting June 10… sparking a selloff.
We’ve also seen traders and investors pile into U.S. Treasuries, like the iShares 20+ Year Treasury Bond ETF (TLT)… an indication traders are getting on the defensive and trying to hedge their portfolios. Now, this is one of my favorite ETFs to trade, so I’ll be keeping a close eye on it.
That said, the market is very shaky… and any negative headline could send it crashing. If you don’t know how to trade in high-volatility environments… your portfolio could suffer.
Now, we’ve still got some earnings names to watch like Beyond Meat (BYND), Tiffany & Co. (TIF), MongoDB (MDB), Stitch Fix (SFIX), and Big Lots (BIG).
But first, let’s take a look at the economic calendar because the markets are back into focusing on the macros… and there are some notable indicators for the coming week.
Economic Calendar
Monday June 3, 2019
- 10:00 AM EST ISM Manufacturing
- 10:00 AM EST Construction Spending
- 12:40 PM EST Fed’s Barkin speaks to Charlotte Economics Club
- 1:25 PM EST Fed’s Bullard speaks in Chicago
Other Key Events
- Monthly Auto sales data released
- China Caixin manufacturing PMI
- Eurozone manufacturing PMI
Tuesday June 4, 2019
- 7:45 AM EST ICSC Weekly Retail Sales
- 8:30 AM EST Fed’s Williams speaks on reforming bank culture
- 9:45 AM EST Fed Chair Powell welcome remarks at Fed Conference
- 10:00 AM EST Factory Orders for April
- 10:00 AM EST Durable Goods
- 4:30 PM EST API Weekly Inventory Data
Wednesday June 5, 2019
- 7:00 AM EST MBA Mortgage Applications Data
- 8:15 AM EST ADP Employment Change for May
- 9:45 AM EST Fed’s Clarida welcome remarks at Fed conference
- 10:00 AM EST ISM Non-Manufacturing Index
- 10:30 AM EST Weekly DOE Inventory Data
- 11:00 AM EST Fed’s Bostic speaks on Housing Panel in Atlanta
- 2:00 PM EST Fed Beige Book released
Other Key Events
- China Caixin services PMI
- Eurozone services PM, PPI and retail sales
Thursday June 6, 2019
- 7:30 AM EST Challenger Job Cuts
- 8:30 AM EST International Trade
- 8:30 AM EST Jobless Claims
- 8:30 AM EST Productivity & Costs
- 9:45 AM EST Bloomberg Consumer Comfort Index
- 10:30 AM EST Weekly EIA Natural Gas Inventory Data
- 12:00 PM EST Household Change in Net Worth
- 1:00 PM EST Fed’s Williams discusses International Economics
- 4:30 PM EST Fed Balance Sheet
Other Key Events
- European Central Bank (ECB) rate decision at 7:45 AM EST and press conference 8:30 AM EST
Friday June 7, 2019
- 8:30 AM EST Employment Situation
- 10:00 AM EST Wholesale Trade
- 1:00 PM EST Baker Hughes Weekly Rig Count
- 3:00 PM EST Consumer Credit
Now, let’s take a look at the earnings calendar.
Earnings Calendar
Monday June 3, 2019
Earnings Before Open
- No notable earnings.
Earnings After Close
- Box Inc. (BOX) implying 11.05% move (monthly contracts expiring on June 21), historical average move 12.43%.
- Coupa Software Inc. (COUP) implying 11.82% move (monthly contracts expiring on June 21), historical average move 9.72%.
Tuesday June 4, 2019
Earnings Before Open
- Tiffany & Co. (TIF) implying 7.22% move. Historical average move 9.01%.
- Cantel Medical Corp. (CMD) implying 8.20% move (monthly contracts expiring on June 21), historical average move 7.4%.
- Cracker Barrel Old Country Store (CBRL) implying 5.99% move (monthly contracts expiring on June 21), historical average move 4.97%.
- Donaldson Company Inc. (DCI) implying 7.6% move (monthly contracts expiring on June 21), historical average move 6.15%.
- Land’s End Inc. (LE) implying 14.63% move (monthly contracts expiring on June 21), historical average move 19.81%.
- Navistar International Corp. (NAV) implying 8.28% move. Historical average move 9.28%.
Earnings After Close
- Salesforce.com Inc. (CRM) implying 6.20% move. Historical average move 4.26%.
- Ambarella Inc. (AMBA) implying 12.02% move. Historical average move 16.06%.
- Gamestop Corp. (GME) implying 10.92% move. Historical average move 10.91%.
Wednesday June 5, 2019
Earnings Before Open
- American Eagle Outfitters (AEO) implying 9.48% move. Historical average move 9.06%.
- Campbell Soup (CPB) implying 6.15% move. Historical average move 7.98%.
- G-III Apparel (GIII) implying 14.67% move (monthly contracts expiring on June 21), historical average move 18.65%.
Earnings After Close
- ABM Industries (ABM) implying 9.61% move (monthly contracts expiring on June 21), historical average move 12.15%.
- Cloudera Inc. (CLDR) implying 14.15% move. Historical average move 17.95%.
- Five Below Inc. (FIVE) implying 8.70% move. Historical average move 9.84%.
- MongoDB Inc. (MDB) implying 13.43% move.
- Stitch Fix (SFIX) implying 15.87% move.
Thursday June 6, 2019
Earnings Before Open
- At Home Group Inc. (HOME) implying 19.84% move (monthly contracts expiring on June 21), historical average move 18.29%.
- Ciena Corp. (CIEN) implying 9.11% move, historical average move 11.44%.
- J.M. Smucker Co. (SJM) implying 6.52% move (monthly contracts expiring on June 21), historical average move 7.34%.
- Signet Jewelers (SIG) implying 15.32% move, historical average move 20.8%.
Earnings After Close
- Beyond Meat (BYND) implying 17.75% move.
- DocuSign Inc. (DOCU) implying 9.16% move (monthly contracts expiring on June 21).
- Guess? Inc. (GES) implying 14.30% move (monthly contracts expiring on June 21), historical average move 17.93%.
- Zoom Video (ZM) implying 18.90% move (monthly contracts expiring on June 21).
- Zumiez Inc. (ZUMZ) implying 13.45% move (monthly contracts expiring on June 21), historical average move 13.13%.
Expected Initial Public Offerings (IPOs) for the Week
- Crowdstrike Holdings Inc. (CRWD) 18M share IPO expected between $19-$23
- Revolve Group (RVLV) 11.76M share IPO expected between $16-$18 per share.
- Revolve Group is a fashion retailer focused on millennial consumers, and it’s been profitable in 15 of their 16 years since their inception.
- GSX Techedu Inc. (GSX) 19.8M shares IPO expected between $9.50-$11.50
- GSX is a Chinese technology / education company.
We’ve got a lot going on this week, and if you want to know my thoughts on the market and stocks I’m watching… as well as gain access to my live-streaming portfolio and real-time alerts, click here to get started.
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