What Are We Talking About This Week?
Trading SPCX: The Right Way To Do The Wrong Thing
My Best Advice for Investors and Traders
Getting it Right is better than Being Right
📡 Market Radar 🛰
Economic Reports
This market is one obstacle from a melt-up. The obstacle: CPI/PPI. These don’t dampen markets, you’ll regret not having enough stock exposure.
Corporate Business
While plenty companies report, nothing catches my eye. Until NVDA in two weeks, earnings season is in a bit of lull. Eco-data is player one this week.
Monday
Macro
N/A
Micro
BMO: Berkshire Hathaway (BRK.B), BitDeer (BTDR)
AMC: Rocket Lab (RKLB), AST SpaceMobile (ASTS), Plug Power (PLUG), Hims & Hers (HIMS), Quantum Computing Inc (QUBT), USA Rare Earth (USAR)
Tuesday
Macro
N/A
Micro
BMO: Cardinal Health (CAH)
AMC: Super Micro Computer (SMCI), Lumentum (LITE)
Wednesday
Macro
CPI + Core CPI (July)
Micro
BMO: Trimble (TRMB), Amcor (AMCR)
AMC: Cisco Systems (CSCO), Coherent (COHR)
Thursday
Macro
Weekly Jobless Claims
PPI + Core PPI (July)
Micro
BMO: Tapestry (TPR)
AMC: Applied Materials (AMAT)
Friday
Macro
Retail Sales (July)
U. Michigan Consumer Sentiment (prelim)
Micro
BMO: LanzaTech (LNZA)
The Right Way to do The Wrong Thing
Here is the theme for this morning’s letter: prioritize getting it right over being right.
There is no fundamental reason — at this time and at this valuation — to buy SPCX… beyond making a few bucks that is.
I’ve said it from the beginning, there is money to be made in this stock. And, while I’ll remain patient putting my long-term money to work, I can see a trade forming. Truth be told, I likely won’t take it. But, I know a lot of people will. So, let me show you a right way to do the wrong thing.
Why Now?
Even with limited technical history, this is the first time the stock has looked tradable since the initial IPO-burst above $220. In the last few days – despite the share locked up and a lackluster earnings call – the bulls broke the downtrend channel in place since June as well as the vice grip the bears had on the 5d EMA. Now, we’re looking at a potential 5d-13d EMA bullish crossover, which is a promising sign for near-term momentum.
Trading like Fibonacci
I have highlighted the 50% and 61.8% Fibonacci levels. General rule of thumb: a 50% retracement proves nothing; above 61.8% implies the prior downtrend is over and a new, durable uptrend is (and has been) in place.
As a trader, I would look to enter with price action above the 50% level: ~$138.
In addition to being an important Fibonacci level, it is 1% of the IPO price of $135, which should attract buyers eyeing that level.
After purchasing, I would look to close at the 61.8% level ~$146 or with a close below the 5d EMA.
As an investor, I look at it two ways:
Wait for the 61.8% level to be convincingly recaptured, then deploy 25% of your desired investment.
Remain patience for the drawdown implied by the statistics: ~$105.
As I was writing, I noticed that SPCX actually touched a little below – $104 – during the worst of last week. I still believe SPCX will hit $100 – or be a double-digit stock – sooner rather than later, but the tape – the way the market is trading and the technical formations underway – are forcing me to keep a more open mind.
Remember: getting it right is better than being right.
Sticking with the idea of keeping an open mind, let’s move on to the best advice I can give any investor or trader and why it is so important right now.
Subscribe to Insight Edge or Weekender to read the rest.
Special Offer! Get 33% off member of either tier today and get full access to this content and so much more!
Buy 3 Months, Get One Free