Rethinking Potential War Impacts
176: The Weekly Selection
Overview
Hello and welcome back to another Weekly Selection Newsletter. this publication has been pretty quiet over the last few weeks, as I recognize that the price action really just is not all that great. Many of my new adds have been getting stopped, and the names I’ve had for a while are fading back into ranges or lower supports. I was under the impression that a bounce to the range support on SPY would hold, but that became untrue as the week unfurled, with price closing lower to end the session. See below:
With my expectations squandered, I begin a more defensive approach to this week. I will not be taking new entries until a new structure presents itself, or an individual name is displaying strength for reasons unrelated to the market. For example, some of the oil, gas and tanker names that were popular in 2022 amidst macro developments overseas.
Before we move into some of the other charts, I wanted to touch on my thought process for last week, and where I think it went wrong. First, overconfidence in understanding of market impacts. While I was correct that the events over the last couple weeks are not as impactful as we may think, especially from a statistical perspective, they were however impactful to the publics opinions on what this means for the US.
A friend of mine brough up a great point that I think should resonate with everyone:
”It’s different when American lives are lost”
This to me, in hindsight is impactful to markets as people react to lives lost as a means to start a war, which in the near term might not be the best for the market. Furthermore, going back to Trumps original plans for the country in his second term, terminating middle eastern adversaries was not one of them. Whether or not Iran needs to go, it still was not in the playbook, and the market hates surprises.
Lastly, while I do not think the Hormuz Strait stays closed for long, it’s clear that many believe this to be more of an impactful piece of the puzzle than I personally think, so its my responsibility to become more informed on this topic moving forward.
Looking Forward
Looking ahead there are some individual names and groups to focus on, specifically these:
War: NOC GD MOG.A
Drones/Batteries: AMPX ONDS KTOS
Electronics: AAOI COHR GLW INGM
Equipment Manufacturers: CAT GEV OKLO
Memory: SNDK STX MU WDC
Software: APP PLTR
Computer Hardware: DELL
Charts below, lightly annotated, Primarily watching this week as stated before.
DELL: ATH PIVOT, PEG, FLAG
WDC: LEADING GROUP, 50SMA, SUPPORT
AMPX: PEG, PIVOT, VOLUME
GD: ATH, WAR RELATED, BEST IN THEME
Some decent names and ideas, but nothing really jumping off the page. Id like to see SPY reclaim the range to make some opportunities arise, otherwise I will just manage what I have.
Good luck this week!
