Key Global Signals Strategy (Technical Analysis): Assessing Risk/Reward Across The Globe To Find Hidden Clues on the S&P 500's Future Direction Ahead of Paramount Earnings Season
Global Investment Strategy: Signals that May Strongly Suggest the Next Move for SPX, QQQ, DIA
Note: This is an important Strategy update - and a very valuable Investor Education note as well.
I aim to write in non-technical language. All readers should be able to fully understand regardless of experience level.
If you are a public reader, I do believe this note will be eye-opening in terms of actionable insight to help inform your assessment of where markets head next. If you are a member, get ready to leverage these insights to understand where markets are going next.
If you’re a new reader, make sure to follow me on Twitter and Instagram for updates. Be sure to have friends & family be on my public list where I provide thoughtful previews for all readers.
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Members,
Welcome back to another Strategy note, where I am always excited to provide you an update on my views of the markets.
Given that Earnings Season starts getting intense this week, I will provide supplemental concise updates on an ongoing basis if there are opportunities that catch my eye.
While we await fundamental earnings results, I wanted to make this particular note focused on Investor Education and provide non-mainstream insights that I believe fewer retail folks tend to follow.
Specifically, I am excited to share technical analysis on Global Markets that will help provide an edge to U.S. Investors looking to understand where the S&P 500 heads next.
Before I get started, I want to bring back an important point that I believe I have to emphasize especially for new readers of my Community: my style is Intermediate-Term Investing, and that means my approach typically targets opportunities to materialize within 3-6 months.
Sometimes ideas may materialize faster. Other times, they may not materialize at all as the market may not be aligned with my thinking.
One investment idea that I discussed back on March 15th was the Big Banks likely finding support from the SVB crisis selloff.
Here’s what I wrote on JPM, where I saw 128 being a tradable bounce region.
We saw very little action beneath 128, and markets have rewarded investors who have the patience to sit through a bit of noise. Now 137+ or so.
The problem though from Big Banks doing “so well” is that smaller, Regional banks are as a result doing much more poorly.
See below that while Big Banks thrived post JPM earnings, smaller Banks actually whispered via their price action to Investors that their business model is slowly being consumed by larger banks.
So when Warren Buffet recently discussed his view that more bank failures could be coming, I believe he will be proven correct later in 2023. Especially the smaller players.
In other words, I don’t believe Big Banks reporting outsized earnings outcomes is actually that healthy for the market.
The stronger the Big Banks, the weaker the Smaller Regional Banks. The greater the chance that another bank may need to be acquired or go under.
I expect any further rate hikes from the Fed to be tipping points for some of the regional banks. This means that a catalyst for a weaker fundamental backdrop in Regionals is only 18 days away (May 3rd- May FOMC) when the Fed may raise by another 25 BPs - driving further deposit outflows from these banks.
Now, to better inform our edge on where the U.S. markets are heading, I will provide technical analysis of Global Markets where I have never commented on or provided chart-based work on before (I will only include info I personally follow as it’s impossible to follow every market):
On key European Markets/Signals/Correlation to the S&P 500
On key Asia-Pacific Markets/Signals/Correlation to the S&P 500
The technical analysis & charting has been mapped out for you, and will help you cut down substantially on time required to research on your own. All you need to do is follow where the major inflection points/key levels are and observe how they react to upcoming pivot points.
By providing technical analysis on these Global Markets, you will be equipped with a Big Picture Macro landscape that many retail investors most likely do not have to assess global inter-connected relationships and its impact on the S&P 500.
My coverage universe and specialty continues to be U.S. and China, but the technical analysis of key NON-U.S markets here will give you a (meaningful) informational advantage when assessing large directional trends for the SPX, QQQ, and DIA.
With the VIX Index at 17 (historically around ~19), is it really a good idea to be complacent?
Let’s discuss several key Signals that I believe will be very powerful for your assessment of markets, now.