Market Milestones: Prepare for Landing

If you like volatility in the markets, this has been the week for you! Monday and Tuesday brought more selling as the QQQ pulled into the 100-day simple moving average (100DSMA), nearly 10% down from the all-time high. Wednesday delivered a beautiful bullish gap and go above four bearish candles. This bullish momentum was driven largely by the semiconductors, based on the continued capital expenditure that big tech is planning for their AI ambitions. Thursday's market saw sheer carnage and bearish destruction, taking the QQQ down to prices not seen since Tuesday afternoon. All in all, the QQQ is at the exact same price it was at last Thursday, right on the 100DSMA after a bearish candle.

QQQ

The weakness we saw on Thursday comes from economic data hinting at the possibility that the all-knowing and almighty Fed may have held rates too high for too long, and their soft landing may be turning into a crash landing. Who could have suspected that the team who brought you “transitory inflation” that lasted three years couldn’t bring this extremely over-controlled and over-manipulated economy into perfect equilibrium without any economic consequences and turmoil? Anyway, I will get off my high horse now because I have to sell said horse to pay for groceries and probably buy more bitcoin. After all, bitcoin is the fastest horse in town; just don't look at the last 142 days of price action.

BTCUSD (Last 142 days of price action)

This week has been a big week for big tech earnings. Last week we saw GOOGL and TSLA report earnings and both had sizable bearish gaps. This week we saw MSFT report earnings and move down significantly in the post market. However, buyers couldn’t even wait until the next day to buy that sweet sweet MSFT dip. It moved from a post market low of $389.20 to an opening price of $418.74 the next morning, only one percent lower than the previous close. META reported Wednesday afternoon and had the first bullish gap for big tech with an open 10% higher than the previous day. META’s gap faded all Thursday and closed near the 100DSMA.

AAPL reported earnings on Thursday and is nearly unchanged after reporting declining iPhone sales and an increased optimism toward their future A.I. features. AMZN, is keeping with the bearish trend of these big tech names over earnings and gapping down 8% as of this writing. If the gap holds it will be opening near the 200DSMA. If it opens below $165.65, it will form an island reversal with a pretty gnarly all-time high trap. Watch for the $165.00 support to hold on AMZN but if it doesn’t, it could be retesting the next major support around the $145.00 level.

AMZN

Meanwhile, in non-tech-related news, XLU, TLT, and gold are all rocketing higher as tech sells off. That fits very nicely into the hard landing and recession narrative. If inflation is actually slowing, which it seems to be, and the economy is also slowing, which it seems to be, investors will look favorably at longer-duration bonds. TLT broke out above its bearish trendline in June, retested it perfectly two times, and has been trading steadily higher ever since.

XLU is an ETF that represents the utilities sector of the S&P 500. It is up 10% in July, while the QQQ has fallen 10%. It is still 5% below its all-time highs from 2022, so it could have a nice push to reach that level. Its top holdings are NEE, SO, DUK, CEG, and AEP. All of these, except for CEG, have been performing exceptionally well in the past few weeks as investors seek out stability and attractive dividends.

Gold is near its all-time high and showing strength compared to silver. This is likely because silver has significant utility that is factored into its price. When the economy is slow, the demand for silver decreases, and silver tends to underperform. Gold, being a safe-haven asset, tends to outperform during times of uncertainty, especially during periods of monetary uncertainty.

XLU (Utilities ETF)