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Free Market Outlook this week for all paid/free users.

I post daily and weekly market outlooks for all our Live Trader members on the Discord platform. Since the markets got rocked by the Ukraine news last week and there is no telling what will happen next, I am sharing my thoughts with all our users this week.

Market Outlook for the week of 2/14 – 2/18

Market moving earnings are behind us. Fed and Putin rule next week!

All the major market moving earnings events are behind us. With hardly any earnings wildcards left, we should be seeing some stability in the markets. And we did see signs of that, with VIX dropping to 20 last week. After a huge correction like what we saw in January, market participants become nervous and get programmed into thinking that every rally will be met by a wave of selling. That attitude will linger on for some time.

What is preventing volatility from leaving the markets is all these rumors about the Fed raising interest rates anywhere between 5 to <insert random number here>. Until the Fed sets some firm expectations on these hikes, it is going to be hard to find any stable footing. To add to all this, we had the Ukraine situation go from bad to horrible in a matter of days. Until that is resolved, we can expect VIX to easily stay above 25 and this means – Wild Swings.

Macro-economic events next week

Next week starts with CNBC’s interview with Mr. Buzz Kill (Bullard) on Monday morning. Then on 15th comes PPI data (this is market moving inflation data as it affects CPI numbers). On top of that we have FOMC minutes later in the week and as if that is not all, this is also OPEX week. I don’t have a crystal ball as to where we will end up next, but keep trading light until we start seeing some direction.

What to watch for in Earnings next week :

If these were normal times, we would have been excited and looking forward to trading opportunities next week. We have a lot of stocks from our watchlist reporting earnings as highlighted below. But with the level  of instability in the markets, it is best to keep trading to a minimum. If you are a Discord member, I will try to post trade ideas next week in the announcements channel for those who are still interested in trade setups.

Macro Analysis

  1. VIX finally dropped last week to levels where I was expecting the recovery to continue. But then came the Ukraine news and blew all technicals out of the water. VIX spiked above 30 in a single day and we all saw what happened on Friday. Technical analysis works great in stable markets where some kind of momentum is in place Bull, Bear, Sideways doesn’t matter. But when you have this level of instability in the markets, you can’t make even an educated guess. It is best to keep trading to a minimum under these situations (unless you are wildly under-allocated, in which case you can take advantage of the swing lows as they represent trading opportunities) 
  2. Next week is full of market moving events. Keep the dates I posted above in mind and take it one day at a time. Fed has one more chance to calm down the markets but we won’t know until the end of the week.

QQQ observations – (Ignoring DIA/SPY this week as they are moving in sync with Nasdaq)

We had some very clear signs of a recovery in progress early on this week, but the hot CPI numbers and Ukraine rained (pe…d) on the parade for sure.  

What to watch for in the coming week

  • Ignore any mean reversion technical indicators as they don’t work with sudden market developments.
  • Just watch price/action with support/resistance zones next week.
  • $340 is critical support and $350 will also act as short term support for now.  
  • I am not concerned about any bullish scenarios right now, as we need to hold the critical support zones first. 

Treasury yields usually go inverse with growth stocks. TNX rocketed above 20 last week before giving back some of its gains. It has pulled back since but there is no significant movement yet which can have a positive effect on growth stocks.

IWM observations (very interesting development)  

  1. I am covering IWM because it made a very interesting move last week. After being stuck in a sideways pattern for sometime it came back with a vengeance and pierced 205, going all the way to $208. This is a very bullish sign for small caps and cannot be ignored. If it were not for the sudden drop on Friday, IWM is looking extremely bullish. If we see some stability next week, expect IWM to keep heading up. Our IWM 200-201 trade has a really good chance of being profitable if things stay around here.

What to watch for in the coming week

  1. Next week purely depends on Ukraine related developments and the Fed’s message to the markets, but even if we see VIX pullback below 22, expect IWM to march upwards from here.

Bitcoin (Still holding ground)

  1. Bitcoin has made some very nice progress and it appears that the downward pressure which have seen since November is behind us. 
  2. Just like the entire Stock Market, Bitcoin also took a small hit but not technicals have been damaged so far and Bitcoin is still on its way up.. $48K is the level where I would consider Bitcoin related trades to be safe again.

Portfolio Allocation:

As you know I have started taking small trades every time I see signs of a recovery. These trades are all going into my bigger account and I am taking either 1 or 2 contract trades. This way, I can still test the waters but not over-expose my portfolio until the time we have a clear direction. My plan stays the same – keep upping my portfolio allocation very slowly to the tune of 60% – 70% but it needs to be a slow deliberate process. I never want to stretch my portfolio this much and will prefer to not to do this if the markets recover fast enough that most of my Feb trades are saved (so far things are bleak). Remember, dipping into your cash reserves after 40% is an exceptional scenario and it needs to be done very carefully.  

Key Takeaway: A wild week lies ahead of us. Fed and Ukraine can rock the markets. Save Cash!

8 Comments

  1. Tim McGrath

    TWLO was a trade alert but was not included in open position. Am I missing something?

    Reply
    • Nishant

      Hi Tim, not sure I understand your question? Not seeing the connection between TWLO trade and next week’s Market outlook?

      Reply
  2. Daniel

    If we do move into a Bear market will you reposition the $25K challenge as Put trades? Or will Calls be viable?

    Reply
    • Nishant

      It will need to be a methodical process. First step would be to start taking a mix of put spreads and call spreads. Then based on what is working out the best, I would end up switching to the most profitable side.

      Reply
  3. Nitin

    I am unable to see email only alert service while subscribing for the paid service. Earlier there were 2 options, one for discord group access and other one for real time email only alert service. I was interested in the email only but don’t see that anymore. Could you please share me the link to subscribe for this email only alert service.

    Reply
    • Nishant

      Hi, we have discontinued the service due to lack of interest from our members.

      Reply
  4. Richard

    Hey. When is the new challenge starting, I am really interested to get going.

    Reply
    • Nishant

      Hi, I run this as an educational group and I only do the challenge in my own account to have running broker statements and proof that these methods do work. There are no start or end dates for a challenge. It runs on an ongoing basis.

      Reply

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