Earnings galore
This week could tell us a lot about continued weakness in the market
Quick summary:
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A window of weakness opened up on the options market last week. This week is critical for determining if the market stabilizes or if we see a repeat of an April-like sell-off.
Upcoming earnings from tech giants like GOOGL, TSLA, and others could shape the market’s next moves.
We missed the sell-off last week, let’s see what happens this one.
The June PCE index, releasing on Friday, serves as the final inflation indicator before the next Federal Reserve meeting (July 31st), crucial for assessing potential rate adjustments.
The week after, it’s FOMC + QRA again (QRA on Mon and Wed, Fed on Wed). In the paid section on Saturday, I’ll give out our overview of the monetary and fiscal policy scenarios for next week. This time last year, they were jointly responsible for the 3 month sell-off that ensued. Will it happen again?
The competition
We're two weeks into our Q3 competition, and the leaderboard is already showcasing both rising stars and steady climbers. With the leaderboard starting to shape up, now is the time to either defend your position or strategize your rise.
Let’s keep the energy high and aim for the top spots!
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Last week’s performance
Market performance last week was notably influenced by the largest July options expiration in history, with over $2.7 trillion in notional options exposure winding down, including $555 billion on single stocks. This monumental expiration this time led to a sell-off, with SPX closing the week down by almost 2% and NASDAQ by 3.5%, signaling a potential onset of volatility in this "window of weakness" following the VIX expiration.
Too bad we missed this sell-off and failed to profit from a continued move down.
As we look ahead, all eyes are fixed on the upcoming earnings reports from key market movers like GOOGL and TSLA early next week, followed by MSFT, META, AAPL, and AMZN later on. The outcomes of these reports are critical, as they could either prompt a market recovery or extend the losses, depending on whether these tech giants can meet the sky-high expectations set upon them. Which is a stretch to say the least, but they cleared it thus far. Will be interesting the see the market reaction nevertheless.
A good thing for our forecasters: GOOGL and TSLA are released today after close, so you’ll potentially get a good idea coming into Wed of how the rest of the week might look like. Good luck!
Shifting our focus to the broader economic landscape, this week’s highlight includes the release of the June personal consumption expenditures (PCE) index on Friday, which stands as the last major inflation update before the Federal Reserve's meeting in late July. Additionally, the release of preliminary second-quarter GDP figures on Thursday will offer further insights that could impact Fed expectations.
On the political front, President Biden's announcement that he will not seek reelection is most likely a non-event for markets. Don’t get swayed by political events for trading. Markets very often simply don’t care.
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