DailyPlay Updates – July 22, 2022

Another summer Friday is upon us, which means even less liquidity than the diminished bid/offer size we’ve already regularly seen for months. It’s not a good day for an institutional portfolio manager to put on a large trade.

Tech should be under strong pressure today with SNAP missing their earnings report and seeing the stock fall 25% quickly in after-hours trading, while META fell 5% in sympathy. But even if we end the week poorly, we are now seeing dip buyers, so that may balance out some bad reports’ negative effects on overall price action.

In the bigger picture, the SPX’s weekly cloud’s Lagging Line continues to be the most reliable indicator of SPX direction, and while it still remains above the bottom of its cloud, there is a near-term bullish bias. But I will tell you – well in advance of it potentially happening – that I still will be looking to sell into market strength (probably in the 4200—4300 level). And maybe even in a large way.  I am not at all convinced that the 2022 low at 3637 stays the low this year. 

SPX – Weekly

I think the macro picture is still a major issue, and that this current rally is more about over-zealous bearish positioning at the wrong time (meaning too much selling had come in since the low was made. The shorts need to get squeezed out before the market can likely take another leg lower.)

Also, keep an eye on the US Dollar.  It is stalling against a monthly TDST Line at 107.31 that it has already gone above and back below on an intra-month basis. If the greenback fades, stocks get a tailwind for its rally, as dollar strength in 2022 continues to hamper equity price advancement.

Enjoy your weekend.

– Rick Bensignor
Chief Market Strategist