Part of the weekly newsletter sent on 13th July 2020
US Stock Market
The week ahead is uncertain for the equity market. Anytime soon, a sudden drop is possible (especially after Sun is in opposition to Saturn on 16th). The market may continue in pressure from there and until 26th July 2020. Today, American markets may open positive but closing is expected to be negative. On Tuesday, the market may trade either way but closing maybe bearish. On Wednesday, a mixed trend is indicated. On Thursday-Friday, the trend is unfavorable for the equity market.
Next week, more pressure may be observed. It is advised to be alert in the market. This is a bull trap. The corona numbers are rising exponentially. We are moving back from re-opening to re-enforcing lockdown across major cities.
This week, S&P500 can move up to 3225 on the higher side. On the lower side, it can drop down to 3030 or below. NASDAQ has resistance at 11,000 (if not crossed then it may drop down to 10300 on the lower side). The earnings calendar for second quarters is due shortly as it would constitute the period of shutdown/lock-down/COVID-19.
Non-IT/Tech companies may be deeply affected.
Earning calendar for this week:
- 14 July: CITIGROUP (C), JP MORGAN (JPM), DELTA AIRLINES (DAL)
- 15 July: GOLDMAN SACHS (GS), UNITED HEALTH (UNH), EBAY
- 16 July: NETFLIX (NFLX), BANK OF AMERICA (BAC)
In the above stocks, profit booking may be observed after earnings are announced. Avoid buying them at higher levels. On the result’s day, put options could be bought. You can also long VMWARE (VMW) with S/L 140 for target 155-165.
Update: We’ve been suggesting to short TESLA and AMAZON at higher levels. TSLA went down from 1780 to 1497 while AMZN went down from 3394 to 3104.
Indian Stock Market
Indian market may open slightly positive. In this week, trend is uncertain. Today, market may close flat. From Tuesday-Thursday, a sudden drop is possible in equity. On Friday, recovery may be observed. In next week, sharp selling may be observed on Monday.
Nifty has resistance at 10890 (if it closes above 10890 then breakout would be observed) and support at 10600.
The current situation is a bull trap and the earning calendar is shortly due for the period of lock-down. The earnings are definitely going to be affected and hence caution is advised in long positions.
Intraday perspective: market may open flat/flat to positive and then decline until 12.00 HRS. From 12.00 to 13.50 HRS, trend is positive. From 13.50 HRS to closing, trend is uncertain. On Tuesday, market may open slightly negative.