Third quarter earnings season starts this week, with reports from Delta Air Lines Inc. (DAL) and a host of commercial banks that include Citigroup Inc. (C) and Bank of America Corp. (BAC). Dow component JPMorgan Chase and Co. (JPM) looks like the best bet after earnings because it’s trading within pennies of an all-time high, with no overhead resistance. Accumulation hasn’t matched positive price action due to mixed messages about inflation but growing fears of rising rates could easily yield higher bank stock prices.
The smart trade on Bitcoin could be to the downside in coming weeks, but don’t sell short too early. The current advance has lifted within 2,000 points of the .786 Fibonacci retracement of the second quarter decline. This harmonic level is euphemistically known as the ‘place that rallies go to die’, with high odds for a reversal and decline that could reach moving average support below 50,000. In turn, that might be a perfect spot to go long for a ride into April’s all-time high.
Moderna Inc. (MRNA), one of the decade’s hottest stocks so far, should be watched for a buying opportunity in coming sessions. The stock posted an all-time high in August and broke down from a double top at the start of October, dropping to a three-month low. However, the selloff is rapidly approaching July’s unfilled gap between 261 and 271, which has narrowly aligned with the 200-day moving average. This level marks a high odds turning point for a high percentage relief rally.
The WTI Crude Oil futures contract tagged 80 for the first time since 2014 on Friday, rallying on limited supply and soaring demand. Energy funds that include SPDR Select Sector Energy ETF (XLE) have underperformed the commodity due to debate about climate change and the transition into alternative energy. Sadly, politicians don’t realize it will take years to replace fossil fuels, raising the potential for $200 crude oil that yields windfall profits and higher stock prices for producers.
Facebook Inc. (FB) got clobbered after a whistleblower told her story to 60 Minutes and Congress, prompting calls for new regulation. The selloff reached the 200-day moving average last week, setting up a key test of support. The stock has tested this level three times since April 2020 and has bounced three times, suggesting that dip buyers will go to work this week. However, aggressive profittaking may be needed, with the declining 50-day moving average above 350 likely to trigger another reversal.
For a look at all of this week’s economic events, check out our economic calendar.
Disclosure: the author held no positions in aforementioned securities at the time of publication.