We all knew that Wednesday's Consumer Price Index report for July would be the most watched event of the week. While I didn't have a strong opinion on where the headline rate would come in, I never expected the major market averages to spike as high as they did.
Setting aside Wednesday's rally, my baseline expectation continues to be for lower prices over the next two or three weeks. However, as long the Invesco QQQ Trust (QQQ) and SPDR S&P 500 ETF (SPY) hold above their 21-day exponential moving averages, any declines will likely attract reasonably active dip buyers.
From a trading perspective, I plan to sell my remaining QQQ shares into $330. While momentum could easily carry the ETF toward the 200-day simple moving average, between price resistance at $330 and the year-to-date volume-weighted average price (VWAP) at $328.50, I'd rather err on the side of caution. If you want to ride the current trend as long as possible but still maintain a reasonably tight stop, consider using a close under the 8-day EMA as your dynamic trailing stop.
On the earnings side, The Trade Desk (TTD) delivered solid second-quarter numbers and guided toward solid third-quarter results. TTD's strong report was a nice break from what most tech companies reported over the past couple weeks and traders rewarded the company with a 36% rally.
While I probably won't be buying shares of TTD over the next few days, this stock should be on every trader's watchlist for buying opportunities should the broader market weaken and drag the stock down. Depending on the stock's path, a price near $60 (or maybe put sales) would be compelling.
Another name I've had my eye on is Roblox Corp. (RBLX) , but unlike TTD, the online gaming platform reported disappointing results. I was first attracted to Roblox because it's a pure play on the growth/adoption of the metaverse. Unfortunately, this company came public at a wildly inflated valuation. While Roblox has an incredible following with more than 50 million daily active users globally and is still down more than 50% year to date, it needs time to grow into its high valuation.
From a trading perspective, a daily close under $44 likely sends the stock toward $33-$34, and that's where I'll revisit it for a trade.