the only thing that matters | Outlier Insights
Welcome to Outlier Insights!
Each week I work hard to gather and curate information for your convenience. There are two main topics to the newsletter:
Market Analysis is where I share 15 high summary points for the market from the week prior.
Erik’s Brainstorming is where I share a couple ideas to watch each week along with my perspectives; often market related, sometimes not.
If what I do helps you out, please consider either subscribing on Substack or joining the Patreon to support my work and join the Outlier Community! You can also simply share the content, which is a big help as well.
Be an Outlier!
-Erik
Announcements
Outlier Community Updates:
The Outlier Pro Trading Challenge for this month centers around creating a more efficient analysis process. Starting with creating basic trade analysis flows and checklists. A key aspect of trading is simply the number of things we can look at to find “the best”. This speeds that process significantly.
The next Outlier Pro Plus Zoom workshop is 21 July at 5pm PT! For those interested in joining at the promotional rate: https://www.patreon.com/OutlierTrading
Links.
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Latest Videos Playlist - Erik’s most recent YouTube videos - released every Sunday
1. Market Analysis.
Here is a summary of this week's market news in 15 bullet points:
Record Highs Meet a Pullback: The S&P 500 and Nasdaq both surged to new all-time highs mid-week before retreating to end with slight weekly losses.
Winning Streaks Snapped: The minor downturn snapped three-week winning streaks for the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.
Inflation Data Looms Large: Investor caution grew ahead of next week's crucial June inflation data, with the Consumer Price Index (CPI) and Producer Price Index (PPI) releases highly anticipated.
Fed Minutes Signal Patience: Minutes from the Federal Reserve's June meeting were released, reinforcing a data-dependent approach and a continued watchful eye on inflation before any policy changes.
Recession Warning Sign?: Analysts noted a widening gap between the Conference Board's Consumer Confidence Index and the University of Michigan's Consumer Sentiment Index, a divergence sometimes seen as a potential economic warning.
Energy Sector Leads the Pack: Fueled by rising crude oil prices, the Energy sector was the week's top performer, with the S&P 500 Energy Sector SPDR (XLE) gaining over 2.2%.
Financials and Staples Lag: Financial and Consumer Staples sectors were among the worst performers, both seeing declines of over 1.7% for the week.
Delta Soars on Strong Earnings: Delta Air Lines (DAL) shares climbed after it beat earnings expectations and reinstated its full-year guidance, lifting sentiment across the airline industry.
Levi's Beats and Raises Guidance: Levi Strauss & Co. (LEVI) stock jumped after the apparel maker surpassed Q2 earnings estimates and raised its full-year forecast, citing strong brand performance.
PayPal Pressured by JPMorgan News: Shares of PayPal (PYPL) fell on reports that JPMorgan Chase plans to charge fintech companies for access to its customer data, potentially impacting the sector's business models.
Kraft Heinz Explores Major Restructuring: Kraft Heinz (KHC) was in the news following reports that it is considering a major restructuring, including a potential spin-off of its grocery business.
Oil Prices Push Higher: Crude oil futures advanced, with West Texas Intermediate (WTI) trading around $83 per barrel, supporting gains in energy stocks.
Treasury Yields Fluctuate: The yield on the 10-year Treasury note saw volatility throughout the week, influenced by economic data and shifting expectations for Fed policy.
VIX Shows Mild Increase in Caution: The CBOE Volatility Index (VIX), the market's "fear gauge," ticked up slightly, reflecting the more cautious tone at the end of the week.
Looking Ahead to Earnings Season: Beyond inflation data, investors are preparing for the heart of the Q2 earnings season, with major banks set to report their results next week.
Economic Events for Next Week.
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2. Erik’s Brainstorming.
I hosted my monthly reddit AMA this weekend. I view this as community service. I know the type of questions I will get, most of them highly uninformed, lazy, and hoping for an easy button (which we know doesn’t exist).
Yet, I also know there will be a handful that stumble into the thread that might have a lightbulb moment - this is my target for these.
If I were to draw a word cloud from my responses, there is one term that would be in mega font taking the entire cloud - any guess what it is? Profit mechanism.
This is a concept I will continue to relentlessly beat to death because it is the entire foundation of an approach. This is where edge begins.
Profit mechanisms are my way of referring to market effects that we can generate a profit from (There are a lot of market effects that cannot be monetized). This is the first, and most important step, for ANY trader - especially derivatives traders.
Why especially derivatives traders? Simple. As you know, there is NO inherent edge to trading options. Yet they add a lot of complexity.
This requires us to not just get direction relatively correct, but also time, and volatility.
For a refresh on this concept, check out this video:
Be an Outlier
Erik
DISCLAIMER:
The content presented is for informational purposes only and any opinions, news, research, analyses, or other information contained are provided as general market commentary and do not constitute investment advice. Outlier Trading, its affiliates, and employees are not responsible for any investment decisions made based on the information presented. We do not guarantee the accuracy, completeness, or reliability of any information presented and are not liable for any losses or damages arising from the use of or reliance on this information. By accessing this content, you acknowledge and agree to these disclosures and terms of use.