Last week we saw earnings season kick off, with big banks primarily kicking off the week’s reports.
While results & outlooks were mixed, the major indexes were able to notch 3 days of gains, with the bookend days resulting in losses.
This appears to be setting the stage for more volatility to come in the next couple of weeks as more companies report their earnings.
SPUU, the Direxion Daily S&P 500 Bull 2X Shares ETF was able to gain some momentum, but unable to pass beyond the $80.15/share level.
While volumes were above average compared to the rest of July, there still is a lot of uncertainty in the air, as their MACD is still charging upwards bullishly, but their RSI is breaking down.
TQQQ, the ProShares UltraPro QQQ ETF that tracks the NASDAQ’s performance, has seen similar performance, although on higher volumes than SPUU compared to the recent month.
Based on their technical positioning, there looks to be a fallout coming for TQQQ in the near-term, given that their components tend to be more interest rate reliant than S&P 500 companies.
However, given the nature of the concerns for growth outlooks being discussed in recent earnings reports, the S&P 500 will follow close behind once the NASDAQ begins to fall again.
Natural Gas (BOIL), Debt Market Income (JPIE), Senior Loans (BKLN) & 7-10 Year Treasury Bonds (IEF) Are All Bullishly Leading The Markets
BOIL, the ProShares Ultra Bloomberg Natural Gas ETF has recovered a solid amount of its June losses, and looks ready to go test the $95/share level after breaking out above its 50 day moving average.
Their MACD points to more strength to come, and their RSI is still not in the overbought range yet, along with strong recent volume, signaling that BOIL still has momentum to run.
While they don’t have a dividend to provide downside protection, they do have options that traders & investors can use to position themselves against possible downturns as a hedge.
JPIE, the JPMorgan Income ETF is a relatively new ETF, and does not have options yet, but has been performing strongly since June’s steep downfall.
Their RSI is encroaching on overbought territory, while their MACD is still very bullish.
Traders & investors who own these shares have a 2.5% cushion against losses in their dividend yield, should they hold it for more than one year.
They need to break above the $46.80/share level as they continue climbing higher.
BKLN, the Invesco Senior Loan ETF also has recovered well from the losses incurred in June, despite showing weakness on Friday of this week.
Their MACD is still bullish, but beginning to turn bearish & their RSI has already begun to work its way back down towards neutral from recent high levels.
Fortunately, they pay a 3.3% dividend yield annually to investors who own them for a year, and also offer options that can be used to protect traders against any falls in price.
IEF, the iShares 7-10 Year Treasury Bond ETF has also recovered a bit from its fall in March.
Their RSI is pushing towards overbought conditions, which may result in a brief cool off, but their MACD is still bullish.
IEF has options that can be used for downside protection/profits & also pays a 1.2% dividend, for those who hold their shares for the course of a year.
Cloud Computing (SKYY), U.S. Financial Services (IYG), Global Autos (CARZ) & Video Games & E-Sports (HERO) Are All Bearishly Lagging The Market
SKYY, the First Trust Cloud Computing ETF has continued to struggle since November of 2021, and looks to face testing a critical price level this week.
If they fail to break above $72.50, then it appears there will be more near-term pain for the ETF.
Their MACD is beginning to roll over bearishly, and their RSI is neutral, which would facilitate a drop.
Traders can use options to protect themselves on the downside with SKYY, while also collecting a 1.21% dividend annually.
IYG, the iShares U.S. Financial Services ETF has fallen steadily since February, & look to have more room to drop in the near-term.
Traders can use their options to position themselves defensively against future losses, and shareholder get a 1.89% cushion of downside protection from their dividend.
CARZ, the First Trust NASDAQ Global Auto Index Fund ETF has enjoyed a brief rally in July of 2022, after trending downward since November 2021.
They have not traded on meaningful volume over the last few months, when compared with the year prior, showing that sentiment is still not that confident & bullish.
Despite not having options to trade, they do offer a 3% dividend yield as a cushion for investors who purchase the ETF & hold it for a year to protect against losses from volatility.
HERO, the Global X Video Games & Esports ETF has also been steadily in decline since last summer.
They will need to break above the $22.30 & $22.90 price levels to reverse their downward trend, but traders can trade their options as they decline further to profit in the meantime.
Tying It All Together
While the largest & most anticipated news this week will be coming out of the Federal Reserve, earnings will also be a big contributor to market sentiments.
Earnings reports are still sounding pessimistic, and data is still weaker than what investors are anticipating.
How much volatility this creates will be key to figuring out the rest of the year’s interest rate decisions from the Federal Reserve, which will give clues about how to play out the rest of the year in the markets.
*** I DO NOT OWN SHARES OF SPUU, TQQQ, BOIL, JPIE, BKLN, IEF, SKYY, IYG, CARZ & HERO AT THE TIME OF PUBLISHING THIS ARTICLE ***