The Market Is Changing

📈 Economics & Stocks Insights Go Hand In Hand

Author

Simplify Wall Street
September 17, 2023

Uh Oh, It’s Happening

"The stock market is designed to transfer money from the Active to the Patient." - Warren Buffett.

Its Happening GIF by MOODMAN

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What is Macroeconomics, and why does it matter?

Macroeconomics is the branch of economics that deals with the study of the economy as a whole, focusing on larger-scale economic factors such as national income, aggregate output (Gross Domestic Product), inflation, unemployment, and overall economic growth. It examines the relationships and interactions between different sectors of the economy. It aims to understand and explain how changes in these factors can impact the economy on a national or global level.

Notable News & Insights:

Concerning economics and figuring out how to invest or trade in the stock market, though many believe fundamentals aren’t essential and technical analysis is the trump card overall analysis, the economy's health matters. Let us take a peek and remember that this information is for educational purposes, not to scare you into making bad decisions. The key is to stay prepared so you never have to get prepared.

  1. Credit card delinquency is at an all-time high. Delinquency refers to the failure of a cardholder to make the minimum required payment on their credit card account by the due date.

    • Average U.S credit card interest rate is 24% (Provided by lending tree)

  2. Student loan payments are resuming.

    • The resumption of student loan payments can impact the economy and stock market. It may decrease consumer spending, slow economic growth, and increase delinquencies. However, it generates revenue for the government and can influence interest rates.

    • In the stock market, sectors reliant on consumer demand (Walmart, Small Mom and mom-and-pop shops, Royal Caribbean, Car Sales, etc.) may see reduced performance.

    • Economic uncertainty and policy responses can also impact investor sentiment and market performance. While short-term fluctuations can occur, long-term trends are shaped by various factors. Diversification and staying informed can help navigate potential market fluctuations effectively.

  3. Pending an interest rate increase by the Federal Reserve.

  4. Government Shutdown:

    • The U.S. federal government might partially shut down after Sept. 30 if lawmakers don't take action. This could affect workers' paychecks and inspections for the environment and food. Historically, the stock market has not been immediately impacted by this, as the effect takes longer to show in the market.

Here’s a free stock market finance terminology cheat sheet that will make you a savvy financial virtuoso.

Stock Pick Recap

Early in the week, there was a slight divergence in the market.

Divergence: When two similar sector stocks trade opposite of each other, it can be considered a form of divergence. In this context, it's often called "relative divergence." View the charts below.

$TSLA (Leader)

$SPY Flat

$NVDA Lagger

 Our Stock Picks & Alerts

Green = bought | Orange = Profit/Loss

Our golden play was $TSLA

$50 a point. We gained 18 points from 4450 to 4468. Equals $900 per contract

Bought $TSLA Calls for $465 and trimmed partial profits at $550. Profit of $85 per contract. Held the rest over the weekend.

After swinging over the weekend, $TSLA gapped and traded 25 points higher. Results below.

Sold remaining contracts that were bought for $465 at $1,200 for a profit of $735 per contract

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E - mini Short Position.

We shorted 4537 and took profits at 4507. That’s a 30-point move, with each point equalling $50 a point. That’s a total of $1,500 per contract.

Profit taking near 4500 /es

Others Mentioned In Elite Insiders or via Trading Chatroom

$NVDA, $NFLX, $AMD, $SPY, $MSFT

Fun Fact. Did you know? 💡

Over 90% of individuals prioritize businesses with innovation and growth potential when making investment decisions.

Upcoming this week!

WEDNESDAY, SEPT. 20 

THURSDAY, SEPT. 21

  • 8:30 am Initial jobless claims

  • Sept. 16 (Expected = 225,000 | Previous 220,000)

FRIDAY, SEPT. 22

  • 8:50 am Fed Gov. Lisa Cook speaks

  • 9:45 am S&P flash U.S. services Purchasing Managers' Index (PMI)

Short Term Analysis 📝 

Large caps may be the better investment as we move into 2024.

Top Large Caps That May Lead.

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Last Week’s Thoughts vs. Now

This range of 4430-4520 is significant. The bears wanted this area to act as resistance. While we did trade higher into the 4560s, we closed the week under 4500, leaving our bearish thesis intact.

This was said last week by the Simplify Wall Street Team.

In terms of price action, if the E-mini continues to close under this 4535-50 area, we could retest lower prices, such as 4470s, and continue to 4300s based on the timing between price action and economic news. Conversely, bulls have the upper hand the longer they sit above 4500+.

SWS

Our key pivot should be 4520-30s. With the rate change announcement pending, any pops into this range could be sold.

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Enjoy your holiday! 🌟

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