Dan Passarelli, CEO - Market Taker Mentoring

Following yesterday's down day as a result of Apple saying that it was going to scale back on hiring and spending, a little bit in fear of a potential recession, well, the market rebounded quite a bit today and it went over that key level that I've talked about in a lot of our videos lately. Today the S&P 500 went above and closed above the 50 day moving average. Most of my trades don't last 50 days, right? So why is the 50 day moving average so important?

It's because for long term investors and for funds that invest money for the long term, they use the 50 day moving average as a very key signal. So if we close above the 50 day moving average, we've got a really good chance of seeing at least a little bit of follow through. Now, again, as I said in the past, I don't expect markets to make new all time highs anytime soon, but I wouldn't be surprised to see some follow through up to and through the 400 level, maybe even up to the 410 level, possibly up to the next key resistance level, which is at around 420. So we're in the midst of earnings season and next week we have the FOMC announcements. So these next two to three weeks are going to be really key for the direction of the market as a whole going forward.

Another thing to talk about today is that while the volatility as measured by the VIX (or VOLQ if you're looking at the Nasdaq) is historically high, the markets are moving at a really high volatility. And it's a little bit less evident here using the ThinkorSwim charts because ThinkorSwim slightly overvalues the implied volatility on the volatility charts because they use the same calculation that CBOE uses for the VIX, which gives us a higher value. But in NDX, for example, by looking at VOLQ that was pricing in less than a 2% move and you can see that Nasdaq moved over 3% today. we're seeing much bigger moves then I think sometimes volatility lets on. So I want to be careful staying the right side of things, especially if you're trading earnings, only trade earnings with a plan and I hope that helps.

Dan Passarelli, CEO - Market Taker Mentoring

It was kind of a fairly active day in the market today. We had a little bit of a range here. The market was up a bit earlier, kind of pulled back a little bit towards the end of the day.

But the real story is some of the stuff that's really going on and happening right now today, and that is: that earnings season is kind of kicking off in soft launch sort of way today. We had JNJ, NFLX, as well as Lockheed Martin all announcing earnings within the next 24 hours. JNJ and Lockheed Martin, you'll get the news on them by tomorrow morning. Netflix, you'll have to wait until after the close tomorrow. So those are some things that I was trading today. I put on earnings trades in each of those today.

As far as other things, when the market was up a bit earlier today, it ended up being a really nice day for some of those options raider trades, some of the short squeeze trades and there were some in AMC. AMC which is up sort of a fair amount today. We can kind of pull that up. Kind of been steadily rising for a bit and had a little bit of a boost today.

GME was also a pretty strong one. That one's been seeing some bigger ranges lately. Today is not a huge range, but it is up 4% and in fact there were probably about 12, 13, 14 different stocks lighting up options raider, which we can see some of these short squeezes on any sort of day, whether the market is up or down. We tend to see a bit more on days when it's up and so that's why we saw some of these this morning.

But even a handful of the ones that were up this morning doing pretty well are still logging winners here towards the end of the day. I hope that helps.

Dan Passarelli, CEO - Market Taker Mentoring

It was kind of a fairly active day in the market today. We had a little bit of a range here. The market was up a bit earlier, kind of pulled back a little bit towards the end of the day.

But the real story is some of the stuff that's really going on and happening right now today, and that is: that earnings season is kind of kicking off in soft launch sort of way today. We had JNJ, NFLX, as well as Lockheed Martin all announcing earnings within the next 24 hours. JNJ and Lockheed Martin, you'll get the news on them by tomorrow morning. Netflix, you'll have to wait until after the close tomorrow. So those are some things that I was trading today. I put on earnings trades in each of those today.

As far as other things, when the market was up a bit earlier today, it ended up being a really nice day for some of those options raider trades, some of the short squeeze trades and there were some in AMC. AMC which is up sort of a fair amount today. We can kind of pull that up. Kind of been steadily rising for a bit and had a little bit of a boost today.

GME was also a pretty strong one. That one's been seeing some bigger ranges lately. Today is not a huge range, but it is up 4% and in fact there were probably about 12, 13, 14 different stocks lighting up options raider, which we can see some of these short squeezes on any sort of day, whether the market is up or down. We tend to see a bit more on days when it's up and so that's why we saw some of these this morning.

But even a handful of the ones that were up this morning doing pretty well are still logging winners here towards the end of the day. I hope that helps.

Dan Passarelli, CEO - Market Taker Mentoring

There was a pretty good update in the market today, right around up 2% in the S&P 500. And it played out a little bit like I talked about in yesterday's video. We got that jump up above the 20 day moving average, which is not a real major surprise based on some of the things, just some of the psychology going on in the market. And when we see a move through the 20 day moving average, it's very common to see some follow through.

And again, like I said the last couple of days, I'm not expecting to see any new all time highs anytime soon, but we could see a little bit of a trend higher in the short term. Now, the question is that's technically what has occurred, but fundamentally what occurred? Why did this happen? Well, we had some of the Fed governors doing some chatting today and the Feds daily had some really great things to say. It was almost scripted, like exactly what the market wants to hear.

And it didn't seem overly warm and fuzzy either. It seemed pretty real. He said that first of all, he thinks that the July meeting is going to be a good discussion. He says that they're working on getting inflation down without stalling the economy. Just such a simple sentence, but that's exactly what I think the market needed to hear and that is what the Fed cares about.

There's been a lot of messages communicated in a way that maybe wasn't as clear and direct as that that leads to some market confusion and sometimes some panic. Right. He also pointed out that inflation has lasted longer than hoped because Covid is still rampant, obviously. Right. And then the war, the price of gas is high because of market factors that are relating to the war.

So kind of pointing out some of these straightforward things and I think calming a lot of nerves in a lot of ways. Right. He also said that he doesn't expect mortgage rates to keep marching up as they have been. And also he said that the Fed is not talking about raising rates to extreme highs, probably ending up more like in the 3% range. And also that he sees signs that inflation might be coming down based on the University of Michigan data on consumer inflation expectations.

So Daly had a whole bunch of really good things to say. Now, Bullard also talked today and said some things that seem promising too. He said that the Fed may have to get the funds rate to 3.75% to 4% by year end. So maybe not as drastic as some people were thinking. But I believe it was him that also pointed out that yeah, he said that if inflation can come down relatively quickly down to the 2% range over the next 18 months, if the Fed plays its cards right, and also that if the economy moves in ways consistent with a 2% inflation target, we will stop raising rates, and if not, we won't.

So, like, I mean, to me, like, just communicating these very straightforward messages in such a way that it doesn't create confusion, right. That can be a good thing for the market.

We also don't want that to be overdone. Right. We don't want the Fed or anybody else to paint an overly rosy picture. But I just feel just when I read some of these headlines, I feel like there was very effective communication, and that's kind of congruent with some of the things that I've been talking about in some of our videos lately. So, my friends, I hope that that helps, and I hope that you have a fabulous weekend and I can't wait to talk to you next Monday.

Dan Passarelli, CEO - Market Taker Mentoring

We got some more market news coming out today. We've come to the point where we're accepting that, boy, inflation is really high and out of control. And even the Fed governors are telling us now that they're looking at raising rates at least 75 basis points. There's chatter about maybe 100 basis points, which I'm not sure if that's even ever happened in the past.

There's even a little bit of expecting maybe rates to raise later this month ahead of the next Fed meeting. And the market didn't like that news earlier this morning. It was down, I want to say close to about 3%. But we came back and the market closed down just a quarter percent. It almost made it all the way back.

Why the rally? Why did the market recover like that? Because I think a lot of that news is factored in. The market accepts that interest rates are going to rise. I mean, we've known it for a while.

We've been talking about 75 basis points for a while. And so it's not really that big of news. We know the score, we know the game, and kind of know what to expect. A lot of that has been priced in thus far. And so this could be a little bit optimistic for the market.

We're going to see what happens when rates do rise. If that puts us into recession, that could have not just slowing effect on the economy, but also on the market. But in the short term, I don't think that the market is looking as dire as some people might have thought it was. We're going to be watching earnings. We've gotten some of those coming out next week.

It really ramps up. And the following week is the big important week that we all want to be ready for. And you can be ready for trading earnings if you attend my complimentary webinar this evening. Just simply go to the page that pops up next. (go to: markettaker.com/reg)

Dan Passarelli, CEO - Market Taker Mentoring

This morning we had the CPI number come out. That's the consumer price index. And holy smokes, was it hot. It looks like the Consumer Price Index rose 9.1% from a year earlier, and that's a lot! That's the highest inflation number that I can remember seeing in my days. Now that said, we kind of need to break it down just a little bit to understand it a little bit more. Of all the different products and services and things that they factor into that all are not necessarily created equal. They're a little bit sector based. Now, when we remove from that equation the more volatile food and energy components because as we know, gasoline prices, oil prices, they're very high lately, right?

When we stripped that out, what we call the core CPI is actually only 5.9% higher than a year earlier. So that said, all sectors are not created equal. Kind of a similar theme to what I was talking about in yesterday's video. If we also look at rents, rents are rising at a higher rate than they have in the past 30 years as well. Now, we do know one thing for sure.

We do know that across the board prices have been rising, but again, not so much equally. So we need to really think a little bit about why some of these things are happening. And it really all stems from supply chain issues that were caused by the pandemic when it started and a lot of them just never really ended up catching up, right? That's why we have some of the oil problems. That's why we have a shortage in inventory and houses, which is getting a little bit better.

But when there's a shortage of inventory in houses, then people are buying fewer houses because the cost of them went up great deal and now they're renting and that's driving up rent prices. So just looking at the surface number of 9.1% just doesn't really tell you enough of the story to make any good decisions when it comes to doing your trading. So we're going to talk more about this as we move forward.

One of the things that we're going to be looking at moving forward is earnings of some of these individual companies. Because that's going to tell us which companies are able to survive through this inflationary period where component input prices are going up, which include everything from buying the components they need to assemble products to the cost of labor, which companies are better able to weather that storm and which are really going to be getting punished severely by inflation.

So this is a really important earning season. I'm going to be doing a webinar on earnings and I would like you to see it. And the place to register for that is going to pop up right after this video is over.

And if you're interested in learning more about how I think about earnings and trade them, I have a special complimentary webinar coming up that I would love to have you attend so that I can share all my thoughts with you on earnings and how they work and how I trade them. And you can join by going to the link that's going to pop up right after this video. (go to: markettaker.com/reg)