Posted on June 12, 2017 1:33 pm

Week Ahead: June 12th, 2017 - Disregarding Trump, Awaiting the Fed

Last week, we saw the markets hit panic mode on Friday (June 9th), particularly in $QQQ (the Powershares Technology ETF, that approximates the value and performance of the Nasdaq 100) and other members of the tech sector. The chart below shows the pain from Friday pretty clearly…

QQQ Chart - June 9th, 2017

Leading the pain are the next stocks typically abbreviated to “FANG”: Facebook, Apple, NetFlix, Google. They all exhibit explosive growth, that continued beyond the tech bubble crashed. They are so endeared that they’ve got their own abbreviation.

But happened on Friday exactly? Why was the whole market hit so badly and then why were the Qs body-slammed even harder? I mean the Nasdaq 100 hit an all-time high on the very same day…what happened?

Some might point to the geopolitical tensions going on between the US, Russia, China, ISIS and…well…frankly just about everywhere. Even the tension within our country, created by this pseudo-bipartisan government, is at a higher level than it has been for some time now.

The issues with James Comey, et. al. are used to emotionalize people about President Trump in whichever say so best suits them….once they’re mad or at least engaged.



But dros, what about the markets?


I’m getting there.

The whole point of that rant was that when the citizens of the republic, we traders included, it’s easy to create all sorts of misguided anger and crazy chains of thoughts.

The market had withstood worse news in the same week, so why that day? I would have to say that there’s a clear correlation in the 24-year low that $VIX (an indicator of market volatility) hit on Friday as to why.

So what happened Friday? The “house” (the big banks/market makers) were taking home some money, squeezing it out of retail with sellers of the stock on that day, as well as all the bulls who held calls expiring this week (monthly JUN expiries) as a great deal of gains were lost by them not locking in profit.

What do I see coming this week?

I think the energy sector and the the financial sector keep us propped up from collapse until later in the week. I’d advise rolling your JUN17 expiry options or selling them at a loss if you no longer have bullish convictions about the stock. Tech should be fine by next week.

Ok I started writing this a bit too late…it’s time for the opening-bell, I’ll be back with more later.

Cheers,
Rish

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