This Week in Episodic Pivots: July 23, 2023

We're making too much money

We’re making too much money.

And that’s making me nervous. Every time I think I’ve got this thing figured out and I’m going to clean up in the market, the market finds a way to humble me. That’s common among even the best traders. Never get too confident.

Regular readers know I’m a little nervous. That hasn’t changed this past week.

So far the earnings reports have been shaky at best. Banks have outperformed. But the big tech stocks that reported last week - Netflix and Tesla - did not meet their earnings. And they dropped about 10% each.

The rest of the FAANG+ index followed these two lower at the end of the week. And most of the megacaps are trading below their 10-day moving averages. I’m actually not that worried about this yet… The Nasdaq 100 is rebalancing to reduce the weighting of these large caps in the index. It’s a small adjustment, but many index tracking funds are selling down their positions so they match the Nasdaq going forward. Typically these kind of index adjustment trades revert back to their mean after a week or two.

This next week is the big earnings week. We’ve got Microsoft, Google, and Facebook all gracing us with numbers. Investors will be listening closely to what these bad boys have to say about artificial intelligence. And we’ll see Visa and Mastercard earnings so we’ll know how spending habits are shaping up. Then on Friday Chevron and Exxon Mobil report. That will give us a good look at oil demand.

Then we have the Fed meeting this week. We’ll be watching the FOMC rate decision closely on Wednesday afternoon. This will likely move the market. I think the market has priced in a 25 basis point increase. But I think the market believes this will be the last one… And I think they expect Powell to allude to that. But that’s not going to happen. I don’t see that meeting going the way the market wants. But who knows?

With that said, we’re not going to add any new positions at this point. We’re just going to continue to ride our winners to profit-town.

The only move I want us to make is that if ENVX doesn’t open up above $19.75 on Monday, we should close out the position. A lot of technical damage was done at the end of the week, and I don’t see any support until $16. If the stock doesn’t turn around quickly, the trade is over. And we should take our profits and run.

Continue to hold the rest of the portfolio and keep a close eye on the stops.