Tech Earnings Clash With Regional Banking Fears (Free)

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Our View

I gave all the reasons for the ES to go down, but I thought the futures would maintain its trading range just as it has for the last 4-6 weeks. To tell the truth — and despite not getting my way — I’m not surprised at how it went.

The markets have overlooked a gamut of problems over the last 6-8+ weeks; everything from higher rates and inflation, commercial real estate blowing up, bank stress (and failures), a possible debt ceiling breach, BRICs push to knock the dollar down, etc.

At the very least, this should cause a jump in volatility. Does this mean a real selloff is coming? I still think there is going to be a major event this summer, but in between the earnings and next month’s rate hike, it’s not impossible to see some larger swings.

Today we have sort of offsetting realities. On the one hand, MSFT had a strong post-earnings reaction, while GOOGL was muted. Now we get META tonight and AMZN tomorrow.

Remember, just seven stocks — yes, seven! — have driven almost 90% of the S&P 500’s gains so far this year. So it’s critical for mega cap tech to keep a bid in these names for the indices to go higher. The seven leaders combine for more than $9 trillion in market cap.

While all of this is going on, concerns are rising again for regional banks. FRC appears to be the latest on the brink, falling 50% yesterday, while the Regional Bank ETF (KRE) made new 52-week lows.

Just look at some of these recent headlines:

• More bank jitters as First Republic probes asset sales, 'bad bank' options, source says

• UBS hit by old toxic debt costs ahead of 'hard' Credit Suisse task

• First Republic's $100 bln deposit flight jolts investors, gloom drags regional banks

• First Republic Bank deposits tumble more than $100 billion as it explores options

Our Lean

MiM and Daily Recap

The ES sold off down to 4130 on Globex and opened Tuesday's regular session at 4137.75. After the open, the ES traded up to 4144.25 and then sold off down to 4123.50 at 10:36, rallied back up to 4136.50 at 11:21 and then dropped down to 4101.75 at 1:18. After the low, the ES rallied up to the 4108 level, back-and-filled for the next 20 minutes, then sold off down to new lows at 4097.75 at 2:20. From there, it traded up to 4106.50 at 3:22, then sold off down to new lows at 4093.75 at 3:44.

The ES traded 4094 as the 3:50 cash imbalance showed $685 million to sell and traded 4093.50 on the 4:00 cash close. After 4:00 ,the ES sold off to new lows at 4091.50 and traded 4109.50 at 4:23 and traded 4108.75 on the 5:00 futures close, down 50.25 or -1.21%, while the NQ closed down 137.75 points or 1.06% on the day.

In the end, it was one sell program after another. In terms of the ES and NQ’s overall tone, they were equally weak. In terms of the ES’s overall trade, volume rang in at 1.69 million contracts.

Technical Edge —

• NYSE Breadth: 12% Upside Volume (!)

• Advance/Decline: 16% Advance

• VIX: ~$19

S&P 500 — ES

The three-day low broke and ES dove lower on Tuesday, with its 10-week moving average stepping in as support. From here, I’m keeping a close eye on the 4133-44 area.

This zone was the prior three-day low, marks the 10-day and 21-day moving averages, and finally, is the 61.8% retrace of this week’s range.

• Upside Levels: 4133-4144, 4160-65, 4175-80

• Downside levels: 4095-4100 (big on Tuesday), 4070-75

SPY…

Guest Post

PTG/Taylor 3 Day Cycle

Author: David D Dube

Prior Session was Cycle Day 3 (CD3): Markets fulfilled Three-Day Rally Statistic by trading above CD1 Low. Once reached, prices reversed direction and the decline began in earnest, reaching lower projected range objectives. Prior range was 67 handles on 1.687M contracts exchanged.

…Transition from Cycle Day 3 to Cycle Day 1

This leads us into Cycle Day 1 (CD1): The Average Decline Range Projection for CD1 is in-place at 4124. Late day tech earnings yesterday provided a closing bid. For today's session markets will need to find stabilization above prior low (4091.50). As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4110, initially targets 4125 – 4130 zone.

Bear Scenario: Price sustains an offer below 4110, initially targets 4095 – 4090 zone.

PVA High Edge = 4130 PVA Low Edge = 4091 Prior POC = 4103

*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet > > Cycle Day 1 (CD1)

Thanks for reading,

PTG David

Interested in free trial >>> https://tradechat.me/co/ptg-trial

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• ** = previous trade setup we are stalking.

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Relative strength leaders → Tech remains absolutely the strongest group lately.

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!