 Hey everyone, this is Dan with another episode of my weekly analysis. SPY closed last week up 1.9% when QQQ was up 1.8% for the week. The market certainly looked more bullish than a few weeks ago. Yet today, SPY is still down 19% and QQQ down 27%. Commodity prices have been down since the beginning of June. Even though June's CPI came in at 9.1%, some people say it's the last of the bad CPI numbers and that they expect inflation to calm down in the next few months. Is the market heading up now? Let's look into the current events and the charts to see where the market might be heading in the next few days. First of all, let's look at the chart for SPY and QQQ. As you can see, SPY has been down 19% since the beginning of the year and QQQ has been down 27%. SPY has been following this downward sloping trendline since April. However, since June 17th, SPY has been making higher lows and has been following this upward trendline. As of last Wednesday and Thursday, SPY dipped below the lower boundary line which was somewhat of a bearish sign. QQQ has also been following a downward trendline since April. It has also been making higher lows in the last few weeks following this upward trendline. QQQ has been more bullish than SPY in that it popped above the upper boundary line twice in the last couple weeks and it certainly closed last Friday above the upper boundary line. From a technical perspective, both SPY and QQQ will have to stay above the upper boundary lines and then they have to make higher highs in order to confirm the new bullish trend. In the meanwhile, there is a possibility of ending up in a bear flag like this pattern if the prices drop below the lower boundary lines. The outcome, of course, will very much depend on the macroeconomic events and corporate earnings that will be unfolding in the next few days. Let's look at the major current events that have been influenced in the market. First of all, there has been a war going on in Ukraine since February 24th which has caused unimaginable human suffering as well as supply shortages of oil, natural gas, weed and other commodities. Because of the high inflation rate, the Fed decided to raise interest rates by 0.75% in June and they are expected to raise the Fed funds rate again by either 0.75% or 1% in July. In addition, the Fed has been doing quantitative tightening by reducing the Fed asset supposedly by $47.5 billion a month for the months of June, July and August. Starting in September, the Fed will be reducing the Fed assets by $95 billion a month. Many cities in China are still in partial COVID lockdown which has created supply chain delays for many commercial products. The June CPI 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%. Many people are saying that the June CPI number is probably the last of the bad numbers. They expect CPI to go down starting in the month of July because of the recent drop in commodity prices. The leaders of the European Union said they would eliminate 2 thirds of the Russian oil import at the end of 2022. The G7 agreed to explore imposing a price cap on Russian oil. President Biden just wrapped up his visit to the Middle East which included a stop in Saudi Arabia. Regrettably, there has not been any announcement about Saudi Arabia increasing oil production. That means oil prices will probably go up in the next few days because the hope of more Saudi oil has been dashed. OPEC did not reach their production target and actually came in 3 million barrels a day short in the month of June. In other words, OPEC is not doing anything to relieve the world shortage of oil after the ban on Russian oil has been imposed. As of July 11th, Russian shut down the Nord Stream 1 natural gas pipeline for maintenance which further restricted gas flow to the EU. Between April and June, Russia already reduced natural gas by 50% to Italy and Slovakia and they have cut off gas completely to France, Poland, Bulgaria, Finland and Denmark. This has driven up natural gas prices in Europe. In the US, we have a different picture for natural gas because on June 9th, there was an explosion at the Freeport Texas Liquify Natural Gas Facility which will take many months to repair. The damage to the facility will limit the ability of the United States to export natural gas to Europe. Russia, Ukraine, Turkey and the United Nations have started to negotiate about opening up a corridor for exporting grain from Ukraine. A recent New York Fed computer model showed that the chances of a soft landing for our economy is at just 10% whereas a hot landing is at 80%. This is certainly a bearish piece of news. The CFO of J.P. Morgan Chase, Mr. Jamie Diamond, recently said that he saw a hurricane coming over our economy. Former Treasury Secretary Larry Summers said that a recession is almost inevitable. The Atlanta Fed GDP model indicated that the US economy is already in recession. Commodity prices have been falling since the beginning of June which will hopefully reduce the inflationary pressure on the economy. This is a chart showing the prices of a few major commodities. From the ranking on the right, we can see that natural gas went up the most since the beginning of the year by 86%. Oil went up by 28% whereas SPY has been down 19%. A few pieces of very important economic data were posted during this past week. The API weekly crude oil stock increased by 4.7 million barrels which will reduce the pressure on oil price. CPI as I mentioned came in at 9.1%. Crude oil inventory also increased by 3.2 million barrels. Initial jobless claims went up slightly from 235,000 to 244,000. That means the economy is still fairly strong. Retail sales came in higher than expected at 1.0%. Industrial production is at 4.16% which is still pretty strong. The Michigan consumer sentiment is 51.1%, still fairly positive. And Baker Hughes oil rigs count went up by 2 which is not a big increase compared to the increase in oil prices. Overall, I don't see a clear sign indicating a recession is starting. The oil inventory seems to be going up which tends to stabilize oil prices. In the meanwhile, because President Biden's trip to Saudi Arabia failed to generate any increase in Saudi oil production, that'll probably cost oil price to go up in the next few days. A few key pieces of economic data will be posted this week. On Tuesday, it'll be building permits. On Wednesday, it'll be existing home sales and crude oil inventory. Then on Thursday, initial jobless claim and Philadelphia Fed Manufacturing Index. I will be watching these numbers very carefully. At this point, I'd like to remind you to subscribe to my Twitter account. In addition to subscribing to my YouTube channel, my Twitter account is DanMarketL. I share with my Twitter subscribers almost on a daily basis, some of my trades, as well as any significant news events. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe, and notification button. That'll enable you to receive notification when I publish my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's continue. This is a chart showing the five-year inflation expectation, which is about 2.1%. The lower chart is a 10-year inflation expectation, which is at about 2.2%. Both chart have come down slightly in the last month or so. It is remarkable that the inflation expectation is just about 2% when the CPI is at 9.1% for June. That means the general public still have a lot of confidence in the Federal Reserve Bank's ability to bring down inflation. Recently, the former Fed official, Mr. Bill Dudley, mentioned that the Fed funds rate might have to go as high as 6% in order to keep inflation down. As of today, the Fed funds rates between 1.5% and 1.75%, which is very far from 6%. Based on my own analysis, by comparing economic data in the 1970s to 1980s, when inflation rate was 8% or more, I believe the Fed funds rate will have to go even higher than 6% before the Fed can get the inflation rate under control. If you want to learn more about my analysis, please refer to the video that I posted on May 22. The cryptocurrency market has lost $2 trillion of its capitalization since November of last year. The crypto market cap has pretty much flatlined since the end of May at about $1 trillion. As long as the crypto market is depressed, it certainly does not help with adding any upward momentum to the stock market. Even though the stock market has been rebounding in the last 2-3 weeks, my view of the market for the next few months is still bearish. Mainly because the Fed is raising interest rates and doing quantitative tightening to try to control inflation. So, when would the Fed stop tightening? I believe if and when CPI is less than 5% or if unemployment rate is higher than 6%, then the Fed will stop raising interest rates and stop quantitative tightening. Of course, if the Ukraine war can come to an end in the next few months, the market will rebound quickly, although it will probably be a short recovery for just a couple months. After that, if the inflation rate is still high, the Fed will continue to tighten and the market will sink again. I've been tracking and trading a few ETFs that have been going up while the market has been heading down in the last few months. They are SQQQ and SPXS, the 3x inverse ETFs paid to the NASDAQ 100 and S&P 500. TMV, the ETF paid to the 20-year treasury rate. UCO, the 3x leveraged crude oil ETF. UGA, the gasoline ETF. XLE, the energy ETF. WEAT, the weed ETF. And UNG, the natural gas ETF. Because of the ongoing negotiation between Russia and Ukraine and the United Nations to open up this corridor for shipping grain out of Ukraine, I will stay out of the weed ETF for now. And because of the continuous lockdowns of many cities in China, I don't think copper-related ETFs are a good investment anymore. This is a chart showing the price movements of the ETFs that I just mentioned. Yet today, UNG is pretty impressive at 88% gain. SQQQ, the 3x inverse ETF, paid to the NASDAQ 100, is the second-best performer at 79%, then TMV came in at 65% gain since the beginning of the year. The one-month picture seems to be flipped from the year-to-day picture. As you can see, the best performers are actually QQQ and SPY at about 5.2% gain. I believe this market rebound might be short-lived as far as the Fed is hiking interest rates and doing quantitative tightening. As the market continues to trend down in the next few months, there will still be some short-term ups and downs in the market. I think we are looking at one of those short-term rebounds, which will probably fizzle out in the next few days. I'd like to remind you that I'm 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.