 Hey everyone, this is Dan with another episode of my weekly reviews. Last week, as of Friday, July 22, SPY was up 2.6% and QQQ was up 3.5% for the week. Is the market heading higher from now on? What are the issues driving the recent rebound? Let's check out the details. First of all, let's look at how SPY and QQQ have been trending since the beginning of the year. We can see that overall is still a downward trend, although since June 17th, both have been rebounding and making higher highs and higher lows. We can see that between April and today, SPY has been forming this triangular or pennant pattern, just like SPY QQQ also formed a triangular pattern. In the last few days, both SPY and QQQs have broken above the triangular patterns, which is the bully sign, at least for the short term. What we see now are the two channels here, outlining the movements of SPY and QQQ since the middle of June. This is a new pattern. Will the market be making higher highs and higher lows from now on? Or maybe we will pretty soon see bear flags like this. The outcome will very much depend on the current events and corporate earnings and third quarter projections that will unfold in the next few days. Let's look at the recent events that have been influencing the market. There has been a war going on in Ukraine since February 24th, which has caused unimaginable human suffering and disruptions to the supply chain for various commodities. The supply chain disruptions have driven up prices for commodities such as oil, natural gas and wheat. Because of the high inflation rate, the Federal Reserve Bank raised the Fed funds rate by 0.75% in June and the Fed has been doing quantitative tightening or QT, which supposedly reduced total Fed assets by $47.5 billion a month for each month between June and August and then starting the month of September, they will reduce Fed assets by $95 billion a month. On June 20th, the Senate advanced the CHIPS bill, which will provide about $52 billion worth of subsidies for U.S. semiconductor companies. The bill will most likely be voted in the Senate in the next few days. After that, it will be sent to the House of Representatives for discussion, revisions and voting. Hopefully it will be approved and will be signed into law by President Biden within a month or so. The tech sector has been getting a boost in the last few days because of the progress with the CHIPS bill. And related to the CHIPS bill, interestingly, the Speaker of the House, Ms. Nancy Pelosi's husband recently bought somewhere between $1-5 million worth of NVIDIA stock. This is a bit of a controversy for Nancy Pelosi. This piece of news has also been driving up NVIDIA stock as well as other semiconductor stocks in the last few days. June's CPA came in at 9.1%, which was higher than the May figure of 8.6%, and which was higher than the April figure of 8.3%. The inflation rate has indeed been very high, which compels the Fed to raise interest rates and to do quantitative tightening. Some cities in China are still in partial COVID lockdowns, which caused supply chain delays for many commercial products. The European Union leaders said they would be reducing the imports of Russian oil by two-thirds by the end of this year. They are also talking about putting a price cap on Russian oil. On July 17, President Biden returned from a visit to the Middle East, but failed to bring back a commitment from Saudi Arabia to increase oil production, and because of that, the oil price popped up for a few days. Since April, Russia has already shut down or significantly reduced the supplies of natural gas they send to Germany, France, Poland, Bulgaria, Finland, and Denmark. This has caused the price of natural gas in Europe and around the world to shoot up. On July 23, Russia and Ukraine agreed to open a path for Ukrainian grains to be exported from certain Black Sea ports. Recently, both the US Fed and Atlanta Fed produced computer models showing that the economy is more likely heading for a hard lending, or the economy is already in recession. That's certainly a bearish piece of development. Commodity prices have been going up since the beginning of the year. Then the prices started to fall in the beginning of June. Hopefully this will reduce inflation pressure in the next few months. At this point, I'd like to remind you to subscribe to my Twitter account, which is Dan Market L, in addition to subscribing to my YouTube channel. With my Twitter account, I update my subscribers almost on a daily basis about some of my trades and about any significant news developments. If you like what you've seen so far, I'd like to remind you to click the like, subscribe and notification button so that you'll be notified when I post my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's continue. We have a lot of interesting stuff to cover. A few important pieces of economic data were published last week. For example, the API weekly crude oil stock went up by 1.86 million barrels. This will reduce immediate pressure for higher oil price. Building home sales came in at 5.12 million units, which is lower than the previous month of 5.41 million units. That means the housing market is cooling down. Initial jobless claims went up slightly from 244,000 to 251,000. This is another sign that the economy is cooling down. The Philadelphia manufacturing index is at negative 12.3, which is a very low level. As you can see from this chart, the last time we had a lower level than negative 12.3 was at the beginning of the 2020 pandemic. Manufacturing PMI for July came in at 52.3, which is the slowest growth rate in two years. There will be a few very important pieces of economic data that will be published next week. They include the new Fed funds rate, the initial jobless claim, and the core PCE price index. I've shown here the second quarter earnings that were announced in the last couple weeks for a few major corporations. They are Taiwan Semiconductor, JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Netflix, Tesla, ASML, and Snap. Among these nine companies, four of them came in with negative earnings surprises. With the exception of Snap, which went down by 27% during last week, the stock prices of the rest of the companies have been holding up well in the last week. Netflix went up by an impressive 16.6% last week because of the 10.34% earning surprise. Even though Snap is not nearly as big as the other companies listed on this page, I showed it because its failure in the second quarter is so severe that many people said Snap brought down the tech stocks last Friday. If you look at the EPS of these companies, comparing the second quarter of 2022 to the second quarter of 2021, six out of the nine companies registered a decline, which is another sign that the economy is indeed slowing down, although this is still a little too early to tell whether we are heading for a recession or not. Next week, a few major corporations will be announcing their earnings, including on July 26, Microsoft, Google, Visa, Coca-Cola, Modano, and UPS, on July 27, Meta, and Qualcomm, on July 28, Apple, Amazon, and Mastercard, and on July 29, ExxonMobil, and Chevron. A few minutes ago, we saw the chart for SPY and QQQ that the market has been rebounding since June 17. This is a table showing the change in the performances of the various sectors. In the first column here, you can see that here today, the best-performing sector is the energy sector. The rest of the sectors have been going down since the beginning of the year. The second column here shows the sector for last month. Consumer discretionary turned out to be the best-performing sector in the last month with 11% increase. The tech sector went up by 8.12% in the last month. I will be monitoring the tech sector and the consumer discretionary sector very closely within the next few weeks. If the market continues to show definitive sign of rebound, I will most likely shift some of my investments into these two sectors. Since the middle of June, we are seeing possible signs of a recovery. Although from the economic data we looked at a minute ago, we also see a lot of signs of the beginning of recession as well. So what we are seeing is a lot of conflicting information. At one point, will the market definitely recover? In my opinion, the market will definitely recover when the Fed stops raising interest rates and stop quantitative tightening. And when will the Fed stop doing those? I believe when the CPI is less than 4-5%, the Fed will declare victory and will slow down its tightening process, eternally, which is not a desirable scenario. That is, if the unemployment rate becomes higher than 6-7%, then the Fed will have to be loosening money supply to try to avoid making the unemployment rate any higher. Of course, if the Ukraine war comes to an end in the near future, there will be a market recovery. The recovery, however, will only last for one or two months if the inflation rate continues to be higher after that. In that case, the Fed will be compelled to tighten again to control inflation, and the market will then drop again. As I mentioned a minute ago, if the market is heading for a steady recovery, I will be investing in consumer discretionary stocks and semiconductor stocks. However, if the market rebound fizzles out in the next few days, I will continue to focus on the ETFs that I have been trading in the last two or three months because these ETFs had been going up when the market was going down. These ETFs include SQQs, which is a triple-inverse ETF pegged to the Nasdaq 100, and also SPXS, the triple-inverse ETF pegged to the S&P 500, TMV, the ETF pegged to the 20-year Treasury rate, UCO, the crude oil ETF, UGA, the gasoline ETF, XLE, the energy ETF, and UNG, the natural gas ETF. Because of the opening of the corridor for shipping grains out of Ukraine, the wheat ETF is no longer a good investment choice. And because of the slowing down of the world economy, the copper-related ETFs are no longer good investment choices either. This is the chart showing how the ETFs that I just mentioned a few seconds ago have been trending since the beginning of the year. As you can see, they went up quickly from January until the beginning of June. Since June, many of them have been dropping, with the exception of UNG, the natural gas ETF, which has gone up quite a bit since the beginning of July. SPY is a candlestick chart here, and the blue line here is QQQ. They are the worst performing instruments on this year-to-day chart. The chart for the last month is very different from the year-to-day chart. UNG is still the best performing instrument up almost 33%. This one down is QQQ at 1.28% increase. SPY is about the same as QQQ. The rest of the ETFs actually have been going down in the last month. If the broad market starts to head down again after the Fed interest rate announcement this coming Wednesday, July 27, then SQQQ and SPXS will start to go up again. Also, as long as the Ukraine war is going on, I believe UCO, UGA and XLE, the oil, gasoline and energy ETFs will most likely go up again. Let's look at the SPY chart and the QQQ chart in more details. For SPY here, I'm showing three panels. The left panel is the minute chart. The middle one is the daily chart, and the right panel is the weekly chart. Also on each chart, I'm showing the Bollinger bands, the volume, RSI indicator, DMI indicator, and MACD indicator. Let's go to the daily chart first. We can see that SPY in the last four days has broken above this upper boundary line, but it dropped down on Friday. In the next few days, we'll see whether SPY can stay above this upper boundary line and start to make higher highs. If SPY can get above this previous high, then it will indeed be a very bullish sign. For support levels, let's zoom in closer. I see the next level of support, of course, being the upper boundary line here at about 390, and then the next level of support after that will be the middle of the Bollinger band around 386, and then the next level down will be 373, the lower Bollinger band. Of course, this previous bottom of 362 will be another support, and if SPY falls below this point, that means the bears have controlled the situation, and SPY will most likely be hitting down a lot more before recovering. For resistance level, if SPY is going to go up, I see the next level of resistance at this point 401, which is gap closure, close to the gap, and then the next level of resistance will be this historical top achieved back in the beginning of June at 417. If SPY can get above 417 level, that will be a very bullish sign, and most likely it will just take off and start shooting up for a few more days. Let's look at QQQ. For QQQ, it's very similar to SPY. It has popped above this upper boundary line for the last four days, and after going up for three consecutive days here, it finally dropped a little bit on Friday. So in the next few days, we'll have to see whether QQQ can stay above this upper support line. If it does, and if it can exceed this previous top, then it will be a bullish sign that most likely QQQ will then go up for a few more days before pulling back. For support levels, I see the next level of support, of course, at the upper boundary line here at 296, and then the next level of support will be the middle of the Bollinger Band at 291, and then if it falls down, then it might be able to get supported at the lower Bollinger Band at 276.5. Now if it continues to fall and drops below this previous bottom established around June 15 at 269, and if QQQ drops below this point, it will indeed be a very bearish sign, and most likely QQQ will then head down for a few more days before it will have a chance of rebound. For resistance, I see the next level of resistance at this previous top of around 314, and if it can exceed 314, that's indeed going to be a very bullish sign. That means it's going to be making higher highs, and then after that, the next level of resistance will be this other historical top at 329 right here, and if QQQ can exceed 329, that's certainly going to be an extremely bullish sign. Not a financial advisor, I share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions, and you should definitely consult with your financial advisors before you do so. This wraps up my video for now, I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.