What Happens After a Massive First Half of 2023? (July 3- July 7)
July 3-July 7, 2023 by Adit Dayal for RIPPYGLOBAL.
Happy Sunday everyone and welcome back to the Rippy Global weekly outlook. The first half of the year is over with the S&P 500 gaining 15.9% led by the markets forward outlook on cooling inflation, the Fed’s slowdown on rate hikes, and advances in growth technology - specifically AI. The largest name in the S&P, Apple, also just hit a $3T market cap.
We continue to trade into the dog days of Summer where hedge funds and managers go on vacation and we get a lot of slow action before the Fall quarter where we will likely see a lot of big action, including volume in new sectors.
This week is not a full trading week. With Independence Day on July 4th, trading on Monday July 3rd on the Nasdaq and NYSE will close at 1PM EST and the bond market will close one hour later at 2PM EST. On July 4th, the market is closed the full day.
As I mentioned earlier, the first half of the year has been great for the market, and other than in 1929, in any year where the S&P 500 has gained more than 10% in the first half, the year ends positive leading Thomas Schuessler, portfolio manager at DWS, to say there’s no reason to shy away from investing this year.
This weekend, many traders were waiting for delivery numbers from their favorite EV names. Tesla delivered 466,140 vehicles vs. the 445,000 expected, a massive beat. This is an 83% increase versus the same period last year and I think this is amazing for EV stocks this week (I have a trade idea later in this article). In terms of China EV names, LI Auto has the best numbers, with Nio and XPEV in line with each other in terms of deliveries.
Goldman Sachs just released a great report about their outlook on the music industry along with their picks for how to play it. They cited music being undermonetized compared to services like Netflix. They also said generative AI should increase productivity and creativity and gave a buy rating to NTES (NetEase), neutral on SPOT (Spotify), and a sell on SIRI (SiriusXM).
#1) This week is a slow week in terms of earnings. A very slow week, but later this month things will get exciting, so unless you want to trade some $AZZ on Friday evening, there’s nothing I see that’s too interesting.
#2) On Monday, the market closes early, but watch all the EV names for increased volume after releasing delivery numbers this weekend. The market is also closed on Tuesday.
#3) On Wednesday, the Fed will release their minutes from June so watch for volume at 2PM.
#4) On Thursday, BIIB will get their FDA action date and the initial jobless claims which is an important economic indicator will release at 8:30 AM
#5) On Friday, the June jobs report will release with the unemployment rate expecting to decline to 3.6% from 3.7%. Remember, a target unemployment is 5% to be in equilibrium with our target inflation rate of 2%.
The S&P 500 ($SPX index) is cooling off after a strong run.
My key breaks are $4482 for bulls and $4404 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF.
INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
Tesla just blew their delivery numbers out of the water and it’s possible this is the gas for the next leg up to $300. We will have to first gauge if the market wants to sell this news but I personally do not think they will. I see a lot of reports stating that the stock is “overbought” but I always keep this in mind:
“Markets can remain irrational longer than you can remain solvent”.
Apple just broke the $3T market cap with strength and continues to make new highs. I mentioned a few articles ago that the $210 PT from Goldman Sachs is the upper level price target. The options flow is bullish and I am not looking to short strength here.
Assuming RIVN has good numbers this is a great cheap sympathy play to the EV stocks as it’s breaking out of this rounding bottom based and has a gap to fill at $18.50. Options flow is amazing as well.
In terms of insider trades, I see LCID got a huge buy but I will let the chart cool down a bit before looking for a dip. The ASAN CEO also continuously buys his stock and Bill Ackman’s Pershing Square Capital is adding to their stake in HHC.
High Short Interest Stocks (MarketWatch)
#1 - CVNA 57% SI
#2 - ALLO 49% SI
#3 - EH 44% SI
#4- BYND 42% SI
#5 - BIG 38% SI
Top Options Sweeps on Friday
Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)
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