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Wednesday, December 7th, 2022 Market Preview

The price action has been very volatile the last few sessions. JPow talked last Wednesday and the SPY was at 395 before he started talking. We rocketed up to 410 the next day after the speech. Lingered around 407 on Friday near the close. 

We had a light economic data this week, so the conditions favored the bulls. Well that faded fast as the market started selling off fast on Monday. We broke under 400 on Monday and haven't really looked back since. On Tuesday, we retested 400 and then proceeded to break 396, 395, 393, and bounced off of the 100MA at 392. Back to back days with some solid selling pressure. So the question that everyone is asking... Why? 

Here is my brain dump on what is going on in the markets:
  • JPow was dovish in tone and has all but guaranteed 50 BPS hike in December. 
  • Jobs Data came in way too hot. Wages went up as did the Job numbers. 
  • CPI and PPI showing inflation is cooling a little
  • Oil is falling
  • TLT (bonds) is rising
  • DXY is above 105 which has been prior support
  • VIX is hanging out near 20
  • FOMC and CPI are scheduled for next week. 

So with all that known in the markets, why the price action lately? Well, I have a theory that we have moved on from the Fed Trade (inflation, rate hikes being the focus) to the Recession trade. I expected this shift to happen after FOMC this month to give us one last Fed Trade reaction with the 50 BPS hike causing a spike, but it appears that info and reaction already happened last week with JPow's speech. 

I will be monitoring the TLT moving forward. If it keeps rising and stocks and commodities stay flat or drop, then we know that there is a flight safety happening and we can assume that it is due to recessionary fears. We are getting near the end of the Fed Trade, and now it is whether it has already started or is this just a simple pullback. Time will tell. 

Current Positions and Plays - 

  • I have scalped a lot lately with some good success. I did re-enter some Jan puts for SPX 3800. I am most likely going to exit these before FOMC next week. 

Economic Data this Week (all times are EST)? - 


THE PLAYS OF THE WEEK for SPY:

  • Honestly it is just play the trend and stay super light. The 15 min chart with the 8 and 21 EMAs has been incredibly accurate this week. 

SPY Technicals - 

  • SPY Technicals - The 30 min, 1 hour, and 4 hour are just above oversold. The daily chart is neutral.
  • SPY is broke under its daily 200MA at 404.79. This MA was the top of the last bear market rally. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line. I expect us to retest this line soon and most likely it turns into support. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 418 is the .236.

Levels I am Watching

  • $SPY - levels 386 > 390 > 393 > 396 > 400
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Stock Market Week Ahead: December 5, 2022 - SPY 396/412 range this week; no Fed Speakers; Friday is most important. DXY, VIX drifting lower ⚠️

  • Monday: Nothing.
  • Tuesday: Nothing.
  • Wednesday: Nothing.
  • Thursday: Jobless claims @ 0830
  • Friday: PPI @ 0830am & UMich Consumer Data @ 10am (this looks like economic data of the week..)
  • NEXT WEEK: FOMC - Dec 14 @ 2pm - and it has SEP (Summary of Economic Projections).  Last FOMC until Feb 1 2023.

Thoughts - General:
  • Last week: Almost nailed the top with the 410 high range for last week.  JPow came in way more dovish than I expected and he sent the market flying.  I ditched my Feb 2023 puts for a loss and went long on calls - that was a prudent move.  I ended up nicely for the week instead of getting drilled.
  • This week…..
  • No Fed Speakers until Dec 14/FOMC.  Enjoy the peace!
  • DXY and VIX drifting down still - VIX in particular is right at the spot it does two things - goes sideways for months OR spikes up violently.
  • On Friday, the jobs report was very hot (unexpected) and it caused a sell off at the open that was entirely shrugged off by end of day — possibly due to JPow optimism from Wednesday OR what Alf spotted (not as hot as it seemed) - https://themacrocompass.substack.com/p/job-market-less-hot-than-you-think 
  •  
  • Is 75bps back on the table for Dec 14 due to that hot jobs report (last one before FOMC)?  It’s possible - JPow did leave that open - but I think it’s unlikely.  I think the data is all just lagging and there’s already more damage than the current data is showing.  While that would be good for the Fed Trade, we’re about to transition away from that and look at the Recession Trade.
  • China relaxing its strict COVID rules in some cities.  Good for oil.
  • Some technical observations 
    • DIA/Dow is only 2400 points from its ATH (that’s not much for the Dow to move based on its move-sizes in the last 60 days).  It has completely broken above its 2022 downward trend line.
  •  
    • IWM has broken above its 2022 trend line and 200MA
  •  
    • QQQ is right near its 2022 trend line (though still a bit away from the 200 MA)
  •  
    • SPY pushed above its 200 MA and alllmost got above the 2022 trend line
  •  
  • This has been one hell of an impressive rally from 350 SPY.  That still-unexplained event from two CPIs ago, the recent CPI +20 day, and then JPow sending it another +12 on Wednesday added up quickly.
  • I could be wrong, but I think the bulls are nearing maxed out on the Fed Trade + Peak Inflation narrative.  There will be little to get excited about after Dec 14.  It’s going to be 50bps (best case), he’s going to lay out a path of higher rates and longer - just slower to get there.  He’s going to warn there’s much work to do.
  • CPI will keep coming down no matter what - maybe not in real terms but definitely in relative to YoY (very important to understand this point!).  The real number could be 10% inflation but the YoY vs 2021/2022 will keep dropping (just math..).  Unless we get a return of inflation run in 2023 later in the year - very possible.  Hello 1970’s!
  • After the Fed Trade is done with, I don’t see the bull case - we’re staring down a recession, bad earnings, rising unemployment, no QE (QT, actually). 
  • The consumer spending is still scary as hell - this has got to slow down - or we’re going off a cliff.  Unemployment should sort that out at some point.
  • Overall, I see us marching up - slowly - into Dec 14.  After that? Maybe drift sideways with one final EOY/Santa Clause rally just to get those bonuses - then January/Feb I’m expecting a big dip when reality hits of what the market is going to face for the following 12 months and those unemployment numbers start spiking.


Thoughts - Technicals (Latest):
  • SPY levels:  396, 400, 405 (200MA), 410, 416
  • Chart - Weekly: Bullish - for now.  CPI + JPow really broke the trend on this one, impressive.  I’ll post this one below.
  • Chart - Daily: Neutral - though small bullish lean.  We’re right at the 200MA.  DIA + IWM made it above it, SPY likely too as well before Dec 14
  • Chart - 4h: Bullish - marching on upwards.

Trading Plan (This Week):
  • Current position: Nothing.
  • There’s nothing on the calendar this week.  It should be a low/normal volume, slow grind upwards until Thursday and especially Friday.
  • Friday should be event of the week with PPI & UMich data out.
  • I’ll pick up some calls on Monday and trade the strength.
  • I’ll also be doing some March 2023 puts shopping (QQQ and SPX) since VIX is 19 - at some point between now and Dec 14.

SPY Weekly

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Stock Market Week Ahead: November 28, 2022 - SPY 385/410 range (week); volume returns; major data Wed-Fri; JPow on deck.

  • Monday: Fed Williams @ 12pm
  • Tuesday: Nothing much.
  • Wednesday - woo! 
    • ADP Employment Change (private sector) @ 8:15 
    • GDP @ 8:30
    • Chicago PMI @ 9:45
    • JOLTS @ 10:00 ⚠️
    • JPow @ 1:30pm ⚠️
  • Thursday: PCE @ 0830 ⚠️
  • Friday: Nonfarm Payrolls @ 0830 ⚠️

Thoughts - General:
  • Last week: I don’t think I made a single trade.  Busy + short week.  Held same positions.
  • Before we discuss this week, there’s two sections from Alf (brilliant macro guy) that you should read - if you don’t read entire article
  • https://themacrocompass.substack.com/i/85090257/the-yield-curve 
    • The thing is bond markets are NOT pricing in a true recession, but just a marked economic slowdown coupled with a Fed mostly on hold in 2023 and perhaps easing a bit into 2024 to gently accompany a slow recovery.
  • https://themacrocompass.substack.com/i/86332633/conclusions-and-asset-allocation 
    • In 2000, the Fed hiked to 6.5% and took off the excess animal spirits in markets.
       In 2022, the Fed hiked to ~5% and took off the excess animal spirits in markets.
       In 2001, job market losses and earnings contraction followed.
       In 2023…the economy is going to be a reflection of the massive monetary and fiscal tightening in 2022.
  •  This week: Party starts on Wednesday morning with ADP, gets warmed up with JOLTS at 10am, and then finale with JPow at 1:30pm (this is NOT an FOMC speech, but one from a conference covering employment and inflation).
  • Thursday has the ever-important PCE (Fed’s preferred measure - since it keys in on consumer spending)
  • Friday has non-farm payrolls premarket.  JPow is likely to shift focus to jobs even more and that will make this Friday’s report even more important.
  • I’m going to attach a screenshot of the calendar this week that shows nothing but positive data expected (for the Fed Trade), except consumer spending (still going up). This week forecast calls for JOLTS to show a drop (bullish for market on Fed Trade), EU CPI to downtick a little, PCE to come down (and significant drop in MoM); non-farm to put on 200k vs 261k (last month); hourly earnings to downtick - all good for the Fed Trade.
  • I think the Fed Trade remains in play and is clearly the focus for now - but not for much longer.  This is the trade of the narrative of the Fed and their expected actions.  December 14, it will cement for many months what is going to happen.  I expect JPow to come in with 50bps, raise SEP from previous, and then note they are going to hold rates in restrictive territory for a while to see how things play out.  That means it’s a long pause - at some point - and even longer until they start dropping rates.  I think we’re going to see over 6% Fed Funds rate by the time it’s done - maybe even 7%.  Then, that’s it.  Time for the market to find something else to obsess and speculate about.
  • After the Fed Trade is out or focus (starting January 2023), the new focus will shift to two things: earnings and unemployment.  Earnings are going to keep whiffing and unemployment should start going up by then.  This should continue the march down on the market.  I’m still looking for SPY 320.  Reminder: AAPL hasn’t cracked yet.
  • I am worried - for the economy in general - about this relentless consumer spending.  Folks just aren’t backing down despite layoffs getting wound up and about to shift up a gear.  Are we just going run off a cliff?  Buy buy buy, SPLAT?
  • SPY 405 is also an upcoming 200MA test.  It has been rejected the last two times it hit this MA.  It dovetails perfectly with a rejection on Nov 30 if the data + JPow comes in ‘not as good as hoped’
  • Next Sunday I’ll go over why the CPI must come down mathematically but it can completely disengaging from inflation reality.  It might already be a bad measure, but it for sure will be next year.


Thoughts - Technicals (Latest):
  • SPY levels:  386, 390, 396, 400, 405 (200MA), 410, 416
  • Chart - Weekly: Bullish - for now.  CPI broke the downtrend; marching up until it has a reason to turn around - Nov 30 or Dec 14.
  • Chart - Daily: Bullish - for another day or two - is this August 2022 all over again?  Sure looks like it.
  • Chart - 4h: Bullish - could push higher in the next few days - then very toppy.

Trading Plan (This Week):
  • Current position: SPX 3700p Feb 28 2023 puts.  Two now at ~3900 SPX breakeven.
  • I’ll add one more put at 405, one more at 410 - then I’m just sitting tight.
  • Otherwise, I’m just sticking to the plan that’s working - trading short-term calls on strength.  Not holding overnight or into any data releases - as positive as they are expected to be, too risky.


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Monday, November 28th, 2022 Market Preview

The holiday week last week gave the market a low volume week that gave the bulls a weekly close above 400. The big question heading into this week is will the rally keep going with JPow speaking on Wednesday? We have a host of data this week that can certainly add fuel to this rally or start the reversal back down. 

On Monday and Tuesday, we have no major data coming in, so the bulls can keep the momentum going without much fear to start the week. However... Wednesday brings the heat. Here is what we are looking at for Wednesday:
  • EU Inflation Data in premarket - this will have DXY implications. 
  • US ADP Employment Data at 8:15am EST - Minor Jobs data report
  • US GDP at 8:30 EST
  • US Wholesale Inventories and US Corporate Profits at 8:30am 
  • ⚠️ JOLTS Job Openings - 10:00am - Very important report to see if the pace of hiring is slowing 
  • ⚠️ Jerome Powell Speech at 1:30pm - The main event of the week. Let's break this one down a little more below. 

It is rather peculiar that JPow is talking a day before the Fed has its 2 week blackout period heading into the December 14th FOMC meeting. Will he be Dr. Doom or will this be a nonevent? All eyes will be glued to every word he says in hopes to give us a sneak peak at what to expect in the Dec meeting. My hunch is he comes in very hawkish and tries to shift the focus from the 50 BPS rate hike coming and push more of a hint that the Federal Funds rate is headed much higher for longer. I also anticipate him to really concentrate on the jobs market still being too hot to even think about slowing the rate hikes down. However, if he comes in even a little bit dovish, the market will rocket up to a possible 430 test in the next 2 weeks imo. Again, all eyes on him Wednesday. 

Current Positions and Plays - 

  • I continued my scalp strategy against my SPX Feb puts. I am currently only holding the core position and will most likely take a small position in calls as a hedge heading into JPow's speech. 

Economic Data this Week (all times are EST)? - 

  • Check the full calendar here: stonks.chat/feed/catalysts
  • This week is jammed full of data and I have highlighted Wednesday above. 
  • Thursday - PCE inflation data in premarket 
  • Friday - Nonfarm Payrolls at 8:30am - This is a sneaky one to look out for. A lot of attention will be placed on Wednesday and Thursday's data. But this one is just as important. 

THE PLAYS OF THE WEEK for SPY:

  • Monday and Tuesday - We don't have any economic data releasing on either day so suspect the bias will be to the upside. With possible de-risking happening at the end of the day on Tuesday. I will be playing very small scalps these two days and will add to my core put position if the SPY tests its 200MA.  
  • Wednesday - This is a huge data day, so I will be doing a small call hedge before JPow speaks just in case he wants to give the bulls a Christmas gift. But the real move will happen after he is done, so I may just tag along after the speech. I am not sure just yet. 
  • Thursday - We have inflation data in the morning and if it comes in cool, this could cancel out any of the hawkish tone that may come in from JPow. I would expect though a continuation move though from JPow regardless of what this data shows. So I am not putting too much weight in this report. 
  • Friday - Depending on the topics that JPow focuses on Wednesday, the Nonfarm payroll data could be a massive report for the market. If my theory is correct that he is shifting to the labor market as the focus, then this report sets up for a nice strangle opportunity in premarket. So I will be looking at doing just that IF Jpow talks heavy about the jobs market on Wednesday. 

SPY Technicals - 

  • SPY Technicals - The 30 min, 1 hour, 4 hour and Daily charts are all almost overbought. This rally seems to be running out of gas technically. But with the data this week, we could see the rally recharge itself up. 
  • SPY is approaching its daily 200MA at 404.79. This MA was the top of the last bear market rally. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line. I expect us to retest this line soon and most likely it turns into support.  407 is the .382 line. That level is near the 200 Daily MA as well, so I expect that to be the target for this rally. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 418 is the .236.

Levels I am Watching

  • $SPY - levels 390 > 393 > 396 > 400 > 403 > 405 > 407 > 410 > 413 
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Stock Market Week Ahead: November 21, 2022 - SPY 390/405 range; holiday week; low volume, bull’s delight.

  • Monday: Nothing
  • Tuesday: FOMC Mester @ 11am; George @ 2:15pm, Bullard at 2:45pm
  • Wednesday: US Jobless @ 0830; UMich Sentiment at 10am, New Homes at 10am; FOMC Minutes at 2pm ⚠️
  • Thursday: Thanksgiving!  US Market is closed for the full day.
  • Friday: Nothing, US Market is closed at 1pm EST.

Thoughts - General:
  • Last week: I was mostly offline last week, I think I made two trades that were quick.  Two wins, so that’s something.  Added one more to my Feb 2023 3700p stash (now at 2)
  • The FOMC Members have taken a more cautious (not hawkish) tone after the last FOMC than before it.  They’re projecting out exactly what the Fed is going to do and trying to slow this recent post-CPI rally down.  Doing a good job, I’d say, if that’s their mission.
  • Bullard will keep warning caution that rates are going higher - even to 6%+ (still nothing by comparison to the 70’s)
  • Minutes will be an interesting read on Wednesday at 2pm  - we’ll get to see how divided they are on pace.
  • As I said last week, it’s no longer a matter of 50/75bps in December.  Who cares about that.  It’s 50bps most likely.  It’s about SEP and what those show - and I think it’s going to be revised upwards target rate - by quite a lot.  Probably even with caveat they may need to revise upwards again.  Pivot is so far off, it’s not worth talking about.  As is a pause.  Let’s not bother right now.  All the market is really looking for (and will get in December) is a tapering of speed of rate hikes - let’s get the language right.
  • Are we into Triple Peak? Peak JPow Fear, Peak Earnings, Peak Inflation. 
  • I think we’re at Peak Earnings - for sure.  We may have hit peak inflation - but I have my doubts based on history.  We’re not at Peak JPow fear until December 14 is out of the way.  He was fear-worthy in November.
  • This week: Low volume holiday week.  I’m expecting it to move up ahead of Thursday.  All bets are off for Friday, it was a blood bath last year.
  • TLDR: I’m short-term bullish on sentiment for the Fed Trade; holding long-term puts for something to break (bigger than FTX).

Weekly Chart

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Monday, November 20th, 2022 Market Preview

We got a holiday week ahead with all the economic data action coming in on Wednesday. Historically, this means a low volume week and thus it is favorable conditions for the bulls. However, last year we say a pretty significant move down of over 15 points on the SPY. 

My gameplan for this week is survival. I am going to go light in all my positions, and not put too much weight in any major moves. I am not sure a trend can be identified this week with the holiday schedule. We are closed on Thursday and are open a half day on Friday. 

JPow has a speech now on 11/30 to discuss the economic outlook and labor markets. I suspect that speech is going to be very very hawkish, so I am looking to fade any major move upward with puts for the end of the year. I am playing that this event will be ultra bearish. 

Current Positions and Plays - 

  • I continued my scalp strategy against my SPX Feb puts. I rolled out my Dec puts to Feb on the day Poland was hit by the missile last week. 
  • I closed out all the calls and am still holding the puts.

Economic Data this Week (all times are EST)? - 


THE PLAYS OF THE DAY for MONDAY for SPY:

  • We don't have any economic data releasing on Monday. Bullard does speak at 2:45pm and he is the hawkish of them all. Last week, he hit the market with a possible 5-7% Fed Funds rate estimation, so I suspect he doubles down on that. 
  • I am looking at very short term trades all week. We are talking a few minutes at most and keeping my size way down. This is a good week for testing out some technical strategies. 

SPY Technicals - 

  • SPY Technicals - The 30 min, 1 hour, 4 hour and Daily charts are all neutral.
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line. I expect us to retest this line soon and most likely it turns into support.  407 is the .382 line. That level is near the 200 Daily MA as well, so I expect that to be the target for this rally. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 418 is the .236.

Levels I am Watching

  • $SPY - levels 386 > 390 > 393 > 396 > 400 > 403 > 407 > 410 
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Stock Market Week Ahead: November 14, 2022 - SPY 390/400 range; PPI; Fed Speakers all week.

  • Monday: Not much.  Some ECB people talking premarket. Braindard at 11:30 (low impact, I think), FOMC Williams at 6:30pm
  • Tuesday: EU GDP premarket; US PPI & NY Manufacturer Index at 830am
  • Wednesday: UK CPI premarket;  US Retail Sales at 830am, FOMC Williams at 9:50am, Fed Waller at 2:35pm
  • Thursday: EU CPI premarket, FOMC Bullard at 8am; Jobless Claims 830am, Bowman at 9:15am, Mester at 9:40am (lots of Fed action today…)
  • Friday: Nohting.

Thoughts - General:
  • Last week: I wasn’t feeling so well last week, so I didn’t trade much.  CPI data was obviously more than event of the week, it was event of 2H2022.
  • CPI - I was arguing with people it was going to come in not just as a downtick, but a cooler reading.  Most seem to be thinking it was going to be above expectations or hot.  We got cold - it surprised even me.  The market reacted correctly and the bulls get that one - no argument from me.  It was an impressive print.
  • HOWEVER.  I, like others I respect, remain unconvinced we’re done.  While I won’t stand in the way of the December CPI, I don’t think the story will be quite the same.  With oil doing its dance and other components appearing to move up, we may get a reversal to the upside - or some more stickiness at a minimum.  This is not falling as far as it roared up.
  • Look over at our friends in UK and EU - their CPI is still going up.  Did US really already reverse inflation?  I doubt it.  It’s far from dead, for sure, it’s still 7.7.  I know the markets trade way ahead of the data, but I think we’re getting ahead of ourselves to go all in on the long side.
  • On Sunday, Fed Waller had a few interesting statements: “FED'S WALLER: THE FED WAS CAUGHT OFF GUARD IN 2021 WHEN INFLATION APPEARED TO MODERATE BEFORE EXPLODING.” “FED'S WALLER: THE CPI REPORT ON FRIDAY IS JUST ONE DATA POINT; MARKETS ARE FAR AHEAD.” “FED'S WALLER: GIVEN THE LEVEL OF INFLATION, THE US POLICY RATE IS NOT PARTICULARLY HIGH.”
  • Alf had some quality, in depth comments on the event: https://themacrocompass.substack.com/p/bear-or-bull
  • The Fed’s rate just isn’t that high.  I realize some companies are moaning but it’s because they’re addicted to 0%.  I can understand that, but this could go so, so much higher and I think it will if inflation isn’t smacked down hard.  I think JPow is going to do this right now that political pressure is out of the way.  That means higher rates for longer.
  • As I said last week, it’s no longer a matter of 50/75bps in December.  Who cares about that.  It’s 50bps most likely.  It’s about SEP and what those show - and I think it’s going to be revised upwards target rate - by quite a lot.  Probably even with caveat they may need to revise upwards again.  Pivot is so far off, it’s not worth talking about.  As is a pause.  Let’s not bother right now.  All the market is really looking for (and will get in December) is a tapering of speed of rate hikes - let’s get the language right.
  • I’m also trying to figure out if we’re in the triple peak - Peak JPow Fear, Peak Earnings, Peak Inflation. 
  • I think we’re at Peak Earnings - for sure.  We may have hit peak inflation - but I have my doubts.  We’re not at Peak JPow fear until December 14 is out of the way.  He was fear-worthy in November.
  • Long brain dump, sorry.  It was important for me to put it to keyboard.
  • TLDR: I’m short-term bullish on sentiment; holding long-term puts for something to break.


Thoughts - Technicals (Latest):
  • SPY levels:  386, 390, 396, 400, 410, 416
  • Chart - Weekly: Bullish - for now.  CPI broke the downtrend.  Ripster hasn’t turned up, but it might, which would be powerful move up.
  • Chart - Daily: Bullish - there’s still more upside here - but approaching overbought.
  • Chart - 4h: Bullish -  we’re right near overbought line, but 4h always likes to push through - looks green like Daily to me

Trading Plan (This Week):
  • Current position: SPX 3700p Feb 28 2023 put - just one that I picked up at SPY 390.  I’ll buy at 400 and 410.
  • I’ll add to my Feb puts at key levels (as noted).
  • I’ll trade calls on bounces/tests of key levels.  The idea here is to pile up cash while I’m waiting for bottom to fall out.

Sharing the weekly below - impressive CPI dent.

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Monday, November 13th, 2022 Market Preview

On Thursday, I said we had a recipe for a green trend day with the bank holiday. We had the UoM report that came out mixed. The consumer sentiment was lower and that was the bullish slant. The 5 year inflation consumer expectations went up, and that was the bearish slant. We dropped on the release, and I ended up buying the dip. We are in a short term bullish trend, so the only bearish item in the report was a long term macro data point. The market digested the report, and continued on its move upward. 

Current Positions and Plays - 

  • I continued my scalp strategy against my SPX Dec puts. I grabbed SPX calls and AAPL calls and made a nice profit on the day. 
  • I closed out all the calls and am still holding the puts. I will look at grabbing some more calls on the next drop to a key level. 
  • My core puts position was 30% of my portfolio and it now down to 10%. However my cash position has increased over 60% while holding the puts.
  • I may start grabbing Feb puts if we break above 404. I am not in a hurry to start this position just yet as I think this rally has some more legs. 

Economic Data this Week (all times are EST)? - 

  • Check the full calendar here: stonks.chat/feed/catalysts
  • Fed Speakers are all over the place this week. And I expect a few more to surprise us each day like what happened last Friday. 
  • Monday - Brainard Speech at 11:30am
  • Tuesday - PPI inflation release at 8:30am
  • Tuesday - Cook Speech at 9:00am
  • Tuesday - Barr Testimony at 10:00am
  • Wednesday - Retail Sales at 8:30am ⚠️
  • Wednesday - Williams Speech at 9:50am
  • Wednesday - LaGrande Speech at 10:00am (DXY implicaitons)
  • Wednesday - Waller Speech at 2:35pm 
  • Thursday - Building Permits and Housing Data at 8:30am
  • Friday - Existing Home Sales at 10:00am

THE PLAYS OF THE DAY for MONDAY for SPY:

  • We don't have any economic data releasing on Monday. Waller on Sunday talked about how the Fed is not looking at relaxing, but they are most likely going to 50 BPS hike in December. This signaled a shift of focus imo to the economic projection rate more than the actual rate hike. So I would not get too bullish about the 50 BPS hike, and expect a larger projection to come in December. That means we got more rate hikes coming for longer. 
  • Even with that information, I am still in buy the dip mode. I do expect a pullback on Monday and possibly into Tuesday with the PPI data. But I will be looking for a reversal candle at a key level and will be jumping in short term calls for a few weeks out. 
  • I will keep adding long term puts at major key levels. 

SPY Technicals - 

  • SPY Technicals - The 30 min, 1 hour, and 4 hour charts are overbought. Daily is close to overbought conditions. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line. I expect us to retest this line soon and most likely it turns into support.  407 is the .382 line. That level is near the 200 Daily MA as well, so I expect that to be the target for this rally. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 418 is the .236.

Levels I am Watching

  • $SPY - levels 390 > 393 > 396 > 400 > 403 > 407 > 410 
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Friday, November 11th, 2022 Market Preview

Happy Veteran's Day to all those who have served. Thank you for all the sacrifices you have and are making for our great country. Now onto to Thursday's recap:
What a Day. What a Day. What a Day...
The CPI came in much cooler than anyone expected and the market went absolutely nuts. A massive rally that saw SPY break 390 and test 395. I have been very critical of these rallies in the past due to many of them being based on a lot of fluff and not much substance. Well today, the bulls got some economic data that can, at least in the short term, merit some peak inflation optimism. It was a historic day for QQQ and SPY and now 410 is firmly in the bulls sights. 

Current Positions and Plays - 

  • I entered the big CPI day fully hedged on my core December puts. That hedge paid off as I was wildly green for the day, and I still have that core position. If the market corrects by the end of the year, those puts will be up huge. But for now, I am trading unrealized losses for realized gains with scalps and hedges. This is working out well for me. 
  • I scalped calls all day long and decided to just hold my core Dec puts position overnight. 

Economic Data this Week (all times are EST)? - 


THE PLAYS OF THE DAY for FRIDAY for SPY:

  • We have a bank holiday on a weekly options expiration day. This has the setup for another one of those slow grind up all day, green trend days. So I will be looking at buying any dips and playing calls for the next few weeks. There are no major landmines imo until Next week's PPI and Retail sales. But even those are kind of low on the totem pole. 
  • I will keep adding long term puts at major key levels. 

SPY Technicals - 

  • SPY Technicals - The 30 min and 1 hour are overbought. 4 hour and Daily are close to overbought conditions. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and we broke it today. I expect us to retest this line soon and most likely it turns into support.  407 is the .382 line. That level is near the 200 Daily MA as well, so I expect that to be the target for this rally. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 418 is the .236.

Levels I am Watching

  • $SPY - levels 380 (major level) > 383 > 386 > 390 > 393 > 396 > 400 > 403 > 407
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Wednesday, November 9th, 2022 Market and CPI Preview

The market was a wild one today. We started off flat and then slowly moved up to 385. It was a low volume move, no news move upward. Then 1pm happened and we started the move downward. The bond market had an auction that had increased demand at that time and some speculated that was the trigger. I think that was a part of the equation but not sure it was alone the cause of a drop of 7 points in an hour to 378. We sharply ran up the next hour to 374 and faded back in the close. It was a wild wild last few hours of the day. 

Current Positions and Plays - 

  • My core put position wasn't too bad today. I even added a few more and have them until December. 
  • I swung a call hedge overnight and closed those nice and green at the open. I then scalped AMD and SPX calls all the way up to 384. I then went one more time in the SPX calls at the 385 test and then the bottom fell out. This wiped out most of my profits today. Very infuriating...
  • My DWAC play ended up profitable on the shares and red on the calls. I am still holding a few calls to see if the anticipated republican wins will push it higher in the morning. 
  • Rought day for me all around. Broke a lot of rules, overtraded, and went off script. 

Economic Data this Week (all times are EST)? - 

  • Check the full calendar here: stonks.chat/feed/catalysts
  • Fed Speakers are all over the place this week. And I expect a few more to surprise us each day like what happened last Friday. 
  • Wednesday - Wholesale Inventories at 10:00am 
  • Wednesday - Fed Speaker Barkin at 11:00am
  • Thursday - CPI Inflation Data at 8:30am  ⚠️
  • Thursday - So many Fed officials talking following the CPI report. Going to be a wild day
  • Friday - UoM Consumer Sentiment at 10:00am

THE PLAYS OF THE DAY for WEDNESDAY for SPY:

  • The big event is on Thursday in premarket with the CPI, so I anticipate Wednesday to be a very choppy day. I lean that it will be red with some de-risking happening throughout the day. 
  • I will look at entering calls on any dip tomorrow to hedge my core puts position heading into the big CPI day. 

CPI Preview: 

  • The headline number is expected to drop from 8.2% to 7.9%.
  • The core number is expected to drop from 6.6% to 6.5%.
  • If the core inflation rate comes in at or below expectations, you will see a major bullish move in the markets initially off the reading. The thing to watch here is if the move stays during the regular market session on Thursday. If it does not fade, we could see a major run to 410 in the next few weeks. If move gets faded, we are stuck in a choppy mess from 375 to 390 for a while. 
  • If the core inflation comes in above expectations, we could a violent move down. Possible June lows test at 362 by the end of the week and possible new yearly lows within a few weeks. 
  • JPow needs to see meaningful drops in inflation for consecutive months before he will consider slowing rate hikes. With the rise in energy prices in the last few weeks, it is hard to see inflation slowing meaningful anytime soon. 
  • Reminder: Fed target rate for core inflation is 2%, so we are a ways away from a rate that JPow will be satisfied with. 

SPY Technicals - 

  • SPY Technicals - The 30 min, 1 hour, 4 hour and Daily are neutral. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and was met with rejection this week.  362 is the .000 line. Bulls keep recovering this line. This is proving to be solid support now. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500. That .500 level is the real deal and the current YTD low. 
  • SPY - The 200 Weekly SMA is 361. The bulls need to keep this level.

Levels I am Watching

  • $SPY - levels 363 > 366 > 370 > 373 > 376 > 380 (major level) > 383 > 386 > 390
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
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Tuesday, November 8th, 2022 Market Preview

The market pushed higher today on no real news. There were some rumors of Trump announcing his 2024 campaign for the presidency. Pretty telling signal that the market stayed green with the China news coming in that they are not relaxing on their Zero COVID policy.

Current Positions and Plays - 

  • My core put position took a hit today. I have them until December but damn I hate seeing red. 
  • I added a call hedge near the end of the day. I missed a better entry by being too cute and waiting for a 374 test. Never got it so I had to grab the calls much higher than I wanted. 
  • I also went a little off script and grabbed some DWAC with the elections coming tomorrow and Trump hinting at announcing a run for 2024. Probably going to get killed on this play, but I couldn't resist it. 

Economic Data this Week (all times are EST)? - 

  • Check the full calendar here: stonks.chat/feed/catalysts
  • Fed Speakers are all over the place this week. And I expect a few more to surprise us each day like what happened last Friday. 
  • Tuesday - Midterms Elections
  • Wednesday - Wholesale Inventories at 10:00am 
  • Wednesday - Fed Speaker Barkin at 11:00am
  • Thursday - CPI Inflation Data at 8:30am  ⚠️ (I will be doing a special preview on this later this week)
  • Thursday - So many Fed officials talking following the CPI report. Going to be a wild day
  • Friday - UoM Consumer Sentiment at 10:00am

THE PLAYS OF THE DAY for TUESDAY for SPY:

  • Not much change from yesterday's preview. 
  • I think we have a few days of chop with a slight lean to the upside. Not expecting a major move until CPI on Thursday. 
  • I am positioned in my 12/30 puts and will continue to play short term calls on any dips to protect my core position. If I can keep stacking realized gains on short term calls while my December puts marinate, I will be sitting pretty when the market finally drops. 

SPY Technicals - 

  • SPY Technicals - The 30 min is close to overbought. 1 hour, 4 hour and Daily are neutral. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and was met with rejection this week.  362 is the .000 line. Bulls keep recovering this line. This is proving to be solid support now. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500. That .500 level is the real deal and the current YTD low. 
  • SPY - The 200 Weekly SMA is 361. The bulls need to keep this level.

Levels I am Watching

  • $SPY - levels 363 > 366 > 370 > 373 > 376 > 380 (major level) > 383 > 386 > 390
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
0

Stock Market Week Ahead: November 7, 2022 - SPY 360/410 range; Elections; CPI; Fed speakers everywhere; bullish week.

  • All week: These Fed Presidents are all over the calendar again.  Expect volatility in both directions.
  • Monday: ECB Lagarge @ 3:40am
  • Tuesday: Election Day (US) - results in evening.
  • Wednesday: Fed Williams @ 3am (from Switzerland)
  • Thursday: Too much going on Thursday. CPI is the main event at 0830 ⚠️ then we have Fed Mester at 12:30; Fed George at 1:30; and finally Williams again at 6:35pm
  • Friday: UK GDP at 2am; UoMich consumer sentiment @ 10am (always moves the market)

  • DIS in afterhours on Tuesday
  • As noted last week, earnings is off my watch now with the majors out of the way, this will be the last week I mention it.

Thoughts - General:
  • Last week: I fumbled the ball more than once overtrading - I had the right positions.  A series of ‘If only I had held’ mostly….grrr.  My biggest takeaway from last week?  It’s okay to have a “long-term” puts position, leave it alone, and trade calls on clear short-term momentum.  That’s been hard to get my head around for two weeks now, but it damn sure works.
  • Last week:  There really was no good news last week - from earnings, Fed, or unemployment.  There were tiny strands that the bulls ran with, but nothing solid - from my view.
  • Elections: I don’t follow politics much beyond its direct impact on the market, but it sounds like it’s going to end up in gridlock in Congress, which is generally positive for the market.  If that’s the case then Wednesday should be political optimism + CPI optimism and it could be very green.
  • Fed: I think we just listen to JPow.  He’s going to go higher than he expected and hold it for longer.  Once everybody gets over this 75 vs 50 debate for December, they’re going to get hit with the fact it doesn’t mean a damn thing - because the updated projections are what’s going to drive the move at December FOMC announcement.  I don’t see CPI getting better or worse by an amount enough to sway his move by then.  We’re likely to see 50bps in December, but only if the CPI is flat/easing a little.
  • Fed Speakers: We had three of these folks come out of nowhere on Friday (I only saw 1 planned on one calendar only - and I didn’t see it until after the fact because it was only on the MW calendar); and that sent the market on rides the entire day.  It was quite an intraday chart to behold.
  • Tech: We’ve already got some negative tailwinds for the week - Apple delays in China due to COVID and META expected to announce major layoffs.  Last week saw a fair number of beefy layoffs starting at other tech companies.  The jobs number is going to catch up with all of this soon enough.
  • Overall, the Fed is still the major driver of the market right now.  I’m shocked SPY has survived all the hits that came out in the last two weeks.  I know it’s just a math equation, but still doesn’t seem right.  Oil and healthcare really holding the entire market up?  If those give, does it do a whiplash catchup of QQQ?
  • Looking at this week, it looks like a raging bull week to me - unless data comes in unexpected.
  • I think we’re going to see the Midterms be a positive catalyst that run right into CPI being a just barely cooler number - and that’s going to send us above 390 at least.  Plus you’ve got all these Fed people out in full force again and they tend to say things that make the market happy.  
  • If the data comes in hot, then all bets are off and we’re going to the recent bottoms - quick.
  • Outside of bad data, I’m - for now - expecting November to be a little green and December to very red.
  • I remain full bearish, however, and will keep my puts - and add to them at key levels. I will trade calls as momentum shows up.


Thoughts - Technicals (Latest):
  • SPY levels:  363, 369, 373, 380, 386, 390, 396, 400, 410
  • Chart - Weekly: Bearish - back on trend due to FOMC meeting.
  • Chart - Daily: Bullish - looks like it wants a few days of green.
  • Chart - 4h: Bullish - same as Daily.

Trading Plan (This Week):
  • Current position: SPX 3600p 12/30 - I was at a tidy profit on Friday, but that huge rally EOD got me.
  • I am adding NQX to my trading watchlist.  This instrument is 1/5th of the NASDAQ 100 and is treated similar to SPX.  There looks to be more opportunity in NQX/QQQ right now vs SPX/SPY
  • I’ll buy calls on a dip on Monday anywhere near 373.50-374.50.  I’d hold these through Wednesday afternoon; then I’ll switch to a Friday expiration call to play CPI which I expect to be positive.
  • I’ll continue to hold my core puts.


Putting the long-term SPY chart below just so you can see where we are on the projected path…. ( I’ve got March 2023 @ SPY 327)

Screenshot 2022-11-06 at 20.56.46.png 98.74 KB

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Monday, November 7th, 2022 Market Preview

 Friday was a roller coaster ride. We tested 370 three times and closed on a nice move into the close. The DXY fell off a cliff on various news from Bank of Canada, Bank of England and China re-opening optimism. Commodities and Precious metals ran off the DXY drop. It was a fun day to follow. 

Current Positions and Plays - 

  • I entered Friday with my 12/30 SPX puts position and 0DTE SPX calls to play the jobs data as a hedge. We opened up way up and I closed the SPX calls at the open for a nice gain. That increased my cash position and allowed me to stomach any negative move against my core puts position that may happen. I will look to doing this again before the CPI report. 

Economic Data this Week (all times are EST)? - 

  • Check the full calendar here: stonks.chat/feed/catalysts
  • Fed Speakers are all over the place this week. And I expect a few more to surprise us each day like what happened last Friday. 
  • Monday - Fed Speakers Collins and Mester at 3:40pm
  • Monday - Fed Speaker Barkin at 6:00pm. 
  • Tuesday - Midterms Elections
  • Wednesday - Wholesale Inventories at 10:00am 
  • Wednesday - Fed Speaker Barkin at 11:00am
  • Thursday - CPI Inflation Data at 8:30am  ⚠️ (I will be doing a special preview on this later this week)
  • Thursday - So many Fed officials talking following the CPI report. Going to be a wild day
  • Friday - UoM Consumer Sentiment at 10:00am

THE PLAYS OF THE DAY for MONDAY for SPY:

  • All eyes will be on the futures session on Sunday night. With China confirming the zero COVID policy, do precious metals and commodities keep their move up? Does the DXY start catching bids and thus moves the market back down? Do Fed Speakers keep contradicting each other with the pace of rate hikes. 
  • I am positioned in my 12/30 puts and will continue to play short term calls on any dips to protect my core position. If I can keep stacking realized gains on short term calls while my December puts marinate, I will be sitting pretty when the market finally drops. 
  • We have CPI this week so I do expect some short covering on Wednesday if we are falling this week. 

SPY Technicals - 

  • SPY Technicals - The 30 min ,1 hour, 4 hour and Daily are neutral. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and was met with rejection this week.  362 is the .000 line. Bulls keep recovering this line. This is proving to be solid support now. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500. That .500 level is the real deal and the current YTD low. 
  • SPY - The 200 Weekly SMA is 361. The bulls need to keep this level.

Levels I am Watching

  • $SPY - levels 363 > 366 > 370 > 373 > 376 > 380 (major level) > 383 > 386 > 390
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
1

Friday, November 4th, 2022 Market Preview

It was a pretty muted day on Thursday. Not a lot of clarity in the markets with the big jobs data release on Friday in premarket. One note for the bears was they were able to close below the 373 support area, but all that is voided with a cooler jobs report. 

Current Positions and Plays - 

  • I closed out my 11/11 SPX puts for a nice profit and entered some SPX 3600p for 12/30. I got a healthy amount of these today and will look to hold them as a core position. 
  • I entered a strangle play about midday for the jobs report in the morning. I ended up way up on the put side with the flush we got at the end of the day, so I closed that side out. I have enough exposure to the downside with the December puts so I essentially am treating the call side as a small hedge if the jobs number is cooler. 

THE PLAYS OF THE DAY for FRIDAY for SPY:

  • All eyes are on the jobs report in the morning. So lets go through some scenarios as to what to look out for. 
    • Jobs Expectations: 
      • Nonfarm Payrolls: 205k expected; 263k last month
      • Unemployment: 3.5% expected; 3.5% last month
      • Avg Hourly Wage: 0.3% expected; 0.3% last month
    • As you can see, we are expected to go way down in the jobs number this month by over 50k. 
    • Scenario 1: Jobs number comes in at or below expectations + Unemployment is unchanged. This would be a slight lean to the bullish side as the jobs number came down, but with the unemployment rate so low, that is not really a clear signal for bulls to rally the market up on. This would be a fade the rip opportunity if we moved up. 
    • Scenario 2: Unemployment comes down - This is a bearish indicator and will cancel out any hope if the jobs number comes in cooler. This has to start going up for bulls to have an advantage in the Fed narrative. 
    • Scenario 3: Unemployment goes up + Jobs are at or below expectations - This is the bullish read and the market will move up on it. 
    • Scenario 4: Unemployment is flat + Jobs come in above expectations. This is bearish and this will trigger a move down. 
    • Scenario 5: Unemployment is flat + Jobs come in above last months reading - We will test the June lows in a swift move down. 
  • I am already positioned for either side. I have my long term puts if we get a bearish move and I have the insurance in my 0DTE calls if we get a bullish move. So I am going to let the chips fall as they may. 
  • If I was all cash and the report came in slightly bullish, I would be looking at fading the rips near 373, 376, or 380 if it got that high. We have CPI next week plus the bulls will need a lot of consecutive favorable economic reports to even hint at JPow pausing anytime soon. So to play calls here for more than a scalp is super risky if the data does not support it. 

Economic Data this Week (all times are EST)? - 


SPY Technicals - 

  • SPY Technicals - The 30 min and 1 hour are close to oversold. 4 hour and Daily are neutral. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and was met with rejection this week.  362 is the .000 line. Bulls keep recovering this line. This is proving to be solid support now. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500. That .500 level is the real deal and the current YTD low. 
  • SPY - The 200 Weekly SMA is 361. The bulls need to keep this level.

Levels I am Watching

  • $SPY - levels 363 > 366 > 370 > 373 > 376 > 380 (major level) > 383
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
0

Thursday, November 3rd, 2022 Market Preview

FOMC Recap - 

What a day. What a day. What a day...
FOMC is always a very entertaining day and today did not disappoint. The overwhelming consensus was that JPow was going to buckle under the pressure and give a hint that a possible slow down in rate hikes was coming in December. He made sure that that was not going to happen by making the following statements:
  • "It is very premature to think about Pausing. We have a ways to go."
  • "I expect us to continue to update the summary of economic projections upward in December"
  • "I don't see the case for softening in the labor market."
  • "If we overtighten, we can use our tools to respond."
  • "Has the window for a soft landing narrowed? Yes."
And on and on and on he went with the hawkish tone. His final statement was very direct in letting market participants that the Fed is not close to pausing. 

So the focus now shifts back to the economic data releases. We have a big jobs data release on Friday and then CPI next week. But he needs to see a few MONTHS of slowing before he will think about slowing. 

In summary, fade the rip is back on the table until the June Lows on SPY are retested. 

Current Positions and Plays - 

  • I entered a strangle right before FOMC and it ultimately worked out well. I entered some 11/11 SPX puts when JPow made it clear that he was not pausing. They are up nicely. 
  • I went ahead and sold my SPX puts for March and took a nasty loss on the NEM call options. With the DXY jumping after FOMC, I don't need to be in a hurry with this one. 

THE PLAYS OF THE DAY for THURSDAY for SPY:

  • JPow brought the pain, and then brought it again. Then he said it one more time to make sure that everyone knows that he is bringing in the pain. 
  • I am going to look at fading any rip that happens now in the market. It sure looks like the market will be retesting the June lows again very soon. Looking at entering puts for the end of the year.  My swing trading strategy is back!

Economic Data this Week (all times are EST)? - 


SPY Technicals - 

  • SPY Technicals - The 30 min and 1 hour are close to oversold. 4 hour and Daily are neutral. 
  • SPY Fibs for ATH to June 2022 low - 390 is the .236 line and was met with rejection this week.  362 is the .000 line. Bulls keep recovering this line. This is proving to be solid support now. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500. That .500 level is the real deal and the current YTD low. 
  • SPY - The 200 Weekly SMA is 361. The bulls need to keep this level.

Levels I am Watching

  • $SPY - levels 363 > 366 > 370 > 373 > 376 > 380 (major level) > 383
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice
1

Stock Market Day Ahead - November 3, 2022 - SPY 368/376 range; JPow came in hawkish; brace for new lows.

What Happened Today (Wednesday)
  • SPY traded ~375 - 389
  • What an exciting day.  
  • A huge majority of the market partipants were expecting him to ease up, pause, pivot, whatever word you want to use.
  • I’ve been writing for weeks that it makes zero sense right now.  However, I was really worried about him giving into all this pressure and the bulls had me largely convinced it was going to happen - I just wasn’t prepared to gamble with them.
  • But…I cut my March 2023 SPX 3400p for a sizable loss this morning - just to get out of the way.
  • Then I went in with an options strangle since I knew it was going to be violent move by end of day.
  • The initial 75bps came out at 2pm and it was a non-event to me because it was expected.  The market took a line or two from the statement to mean he was for sure going to back down - and it rallied almost to 390.
  • I exited the call around 387.50 (not bad) not seeing what the excitement was about.
  • Then he took the mic and he was crystal clear in his message: I’m not backing down without sufficient data showing FOR SURE inflation is coming down, we’re not even discussing a pause, we have much work to do, everything is too strong right now (employment, consumer, etc).  He did acknowledge housing was coming unglued….but then he gave the wildcard I was hoping for: that he expects to revise the terminal rate up (projections - he even went so far to say that he if he were doing them today, he’d revise them upwards) - that’s not on the table until December meeting.
  • That was it.  I went into puts and traded them around a few times - but I shouldn’t have.  I would have been 3x profit what I ended with if I just stuck with my initial move.  There was one candle and statement from him that made me question myself and make a bad move.
  • He threaded the needle initially, then went full hawk mode and put the bulls back in their pens.
  • He earned more respect from me and I suspect from many others today for not caving into political pressure/media/companies and doing the right thing for the US economy.  Kudos, Mr. Powell.

Thoughts - Technicals (Latest):
  • SPY levels:  363, 369, 373, 380, 386
  • Chart - Weekly: Bearish - I wasn’t buying a reversal and that looks correct now.  Long ways to go down from here.
  • Chart - Daily: Bearish - trend reversal today - fundamental event will do that.  MACD/RSI did a 180.
  • Chart - 4h:  Bearish - same as Daily, but more pronounced

Looking Ahead (Thursday)
  • The entire narrative the bull’s had was thrown out the window today.  They’re going to need to dig deep to pull out anything bullish from his statement & comments that will help.  I don’t think it’s there for now.  They will try.
  • More pain is required - maybe in December if CPI and PCE are showing signs of cooling off, but even then, I don’t think it will be enough to get a 50bps out of him.  On the contrary - if it doesn’t start cooling down, he’s going to hit it with 100bps in December.
  • We’ve got ECB in premarket, but probably not relevant.
  • Friday is the next big event - unemployment - in premarket.  Though based on JOLTS and ADP - it should be another decent jobs add (not what JPow wants).  I’m unlikely to hold through this event even though I am pretty sure that it’s bad market news.  I will jump back on the party bus after it’s out of the way.
  • If you didn’t get to watch the FOMC statement & Q/A, you really need to watch it, hear the tone.  Take the time, it’s worth it.  I’m going to rewatch it tonight or tomorrow.
  • I’m looking for 373 to break at some point on Thursday which will cause a snap down.
  • If unemployment comes in hot on Friday, we’re looking at 363-365


SPY | SPX Trading Plans (This Week)
  • I expect that we’ll see dip buyers at the open - maybe a pop to 376/377. I’ll fade that rip.
  • I held SPX Nov 11 3750p overnight, but I anticipate adding to it on opening pop.
  • I’ll likely exit at the close to avoid messing with unemployment data.
  • Then get back in the puts if it’s hot.
  • I see no bullish case right now.

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Stock Market Day Ahead - November 2, 2022 - SPY 373/400 range; drum roll for JPow, please. 🥁

There isn't much to say until JPow speaks.

I'm holding 3 SPX 3400p March 2023.  I may cut them - just to get out of the way - before the data drops at 2pm.

It's been a while since I've seen market participants so divided on what is about to happen - which means the move may be extreme - as one side capitulates.

I think the move is going to be big and go on for days, so I am going to try to wait until he's mostly done speaking - or at least gives the clear signal on when the rate hikes will start easing up AND if he sees a revision up in the terminal rate.  Then go in with confidence and size.

My gut says he gives us the 75bps on Wednesday, says 'everything is on the table' for December, says they're data dependent (like always), BUT they are seeing improvements that could push them to start tapering pace.  This sends it to the moon.

WILDCARD: If he gets asked about the terminal rate in the QA portion.  If he dodges it - no problem.  If he answers it, I think it'll be 'yes, would probably need to revise upwards after data in December' and that would stop the run in its tracks.

That stunt from the White House today was interesting and confusing.  The Fed was meeting today.  Did they let the cat out of the bag?  Or was it just a goof all around? 

We'll see....

Looks awfully bullish unless he channels his inner Volcker (he really should).

If we do get extreme bullish response, I think it's all to set it up in December for an 'unexpected' 75bps + revision of terminal rate with lots of room to knock it down, but keep it in this box its been in for a couple months now....

Good luck!

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FOMC Preview - November 2nd

I wanted to do a preview for the upcoming FOMC meeting and share my thesis on what to expect. The FOMC rate hike decision is set for the Wednesday November 2nd, 2022 at 2pm EST. 

Lets recap the last few rate hikes by the FOMC:
Forbes - forbes.com/advisor/investing/f...


The consensus for the November rate hike is another 75 BPS hike. As you can see from the above figure that would mean we are expecting 4 straight 75 BPS hikes in a row. From 1% in May to 4% in November, which is right on pace to what the summary of economic projections showed us at the last meeting. 

It is important to note that we are not getting an update on the economic projections at this meeting. In the last meeting, we did get that summary updated, which ended up being the critical data to look at. Not many folks recall, but in the last FOMC meeting, the market was rocketing higher as JPow spoke during his press conference in the early going. He kept using bullish buzzwords with his answers and the market was enjoying it. Once he was done speaking, the market started digesting the economic data projections and down we went. 

So for this meeting, we only have the rate hike statement and then JPow's presser to go off of. That makes this FOMC meeting all about how JPow talks and if he hints at what will come in the December meeting. Below are my bullish and bearish arguments for the November FOMC meeting:

Bullish Thesis - 

  • No summary of economic projections
  • No shock regarding the rate hike. 75 BPS hike is fully expected
  • Powell is not pressured here to be overly hawkish. The path of rate hikes is on schedule for what he has said he wants to do. 
  • If we get a lack of clarity for the December meeting, that will allow the Fed Pivot narrative to continue on as JPow did not rule out the 50 BPS hike for then. 
  • Midterms are a week after the meeting, this historically is a bullish catalyst. 
  • The lack of commitment to let us know about the December meeting is there since JPow can allow a few more jobs reports and inflation reports to come in before having to decide December's rate hike.  

Bearish Thesis - 

  • No impactful change in core inflation, so the motivation for JPow to be dovish is small
  • The market rallying into the event, can give JPow ammunition to be as hawkish as he was in Jackson Hole to ease market expectations. 
  • Comment below if you have any additional bearish thesis' cause I am struggling here. And I am super bearish

How I am playing it - 

  • I am leaning that this is a bullish event on Wednesday. I will look at entering 50% of my call position on Monday and hold through JPow's event. If it is indeed a bullish event, I will look at adding the rest of my position afterwards. 
  • I am currently collecting March puts, so if I am incorrect about the calls, I am still ok given that position. 
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Stock Market Week Ahead: October 31, 2022 🎃 - SPY 373/410 range; JPow on Wednesday; Unemployment on Friday. 410 - really?

  • Monday: EU CPI in premarket
  • Tuesday: OPEC meeting (been spicy lately) premarket; JOLTS at 10am
  • Wednesday: FOMC rate hike @ 2pm; Daddy JPow speaks to us at 2:30pm (event of the week) ⚠️
  • Thursday: ECB talks in premarket; normal US data 830am
  • Friday: US Unemployment rate @ 0830 (this is a close second to FOMC) ⚠️

  • With the majors out of the way now, I’m not putting much thought into the rest of the earnings reports this season.

Thoughts - General:
  • Last week: I’m holding some heavy SPX put bags for March 2023 at the moment - 3400p.  I have 4 of them now and not enjoying it.  I traded calls on the AAPL + JPow optimism to make up for what I was getting thrashed on.  Didn’t quite balance out, but I didn’t really get the memo until Wednesday.
  • I spent a lot of time this weekend on my latest thinking - Market Thesis: We're in September/October 1973. What's next? - https://stonks.chat/symbol/SPY/posts/294 - give it a read - some really interesting charts in there.  If you don’t like charts, then skip to bottom.
  • There’s a lot of folks fighting out there right now - between oil/energy, bulls/bears, UK (itself), and real fighting - Ukraine/Russia.
  • I am grinding my teeth with this wild bull run into FOMC.  I’m 50/50 as to whether he’s going to give the bulls & politicians what they want and send this thing to 410 — or if he’s going to bring the heat and do at least 75bps + not give any room for misunderstanding that he’s not slowing down anytime soon (ie Jackson Hole).  
  • The bulls are expecting 75bps + slow down or even Pivot talk.  I just don’t see how we bring down inflation with a Fed Fund rate anywhere near where it is.  6%+ at least is needed.  If you want to see what a real one looks like, go back to the 70’s and 80’s — it was as high as 20% to tame inflation (which was only a few points higher at the peak).  Let's also note unemployment is very low.
  • JPow is a magician though and I expect nothing less this round.  December I think he’s going to upset the bulls when those updated projections come out
  • Then after we get beyond Wednesday, we’ve got Friday’s unemployment rate - will it start ticking up?  It’s necessary to support any sort of Pivot rationale.  He’s not backing down until that starts going up significantly.  The housing market is already in the process of imploding, so that’s one tickbox.


Thoughts - Technicals (Latest):
  • SPY levels:  373, 380, 386, 390, 396, 400, 410
  • Chart - Weekly: Bullish - for now.  I don’t see it lasting many weeks.
  • Chart - Daily: Bullish - we were right last week on the Daily that 390 was the max. Can’t call this one with FOMC, but I lean 410 max.
  • Chart - 4h: Bullish - not far from some overbought status, but we know the 4h loves to extend itself.

Trading Plan (Monday):
  • Current position: 4 SPX 3600p 11/30 that I’m bag holding after the train ran me over last.  I bought at every level I said I would - and I sure hope I’m done.  Last one I’ll buy is 400.
  • We’re at 390 as of Friday.  That’s a real line and we’ve moved 30 points from 360 just a few days ago, taking hit after hit from tech.  Does that get heavy at any point?
  • I am buying calls if we’re above 386 - half position; double up if JPow sends it for the bulls; sell Thursday at close (before Unemployment data); re-enter Friday half position if bullish; ride to CPI.  All this out the door if 386 doesn’t hold.

Putting the long-term SPY chart below just so you can see where we are on the projected path…. ( I’ve got March 2023 @ SPY 327)

Screenshot 2022-10-30 at 21.53.56.png 124.05 KB
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Market Thesis: We're in September/October 1973. What's next?

I've spent the last two nights playing with charts putting the Dow + Unemployment Rate + CPI + 10Y on a single chart so I could see relevant periods in the past vs today.

Here's the two charts I've come up with (1970-1980's):
Screenshot 2022-10-30 at 20.48.58.png 323.7 KB


Recently:
Screenshot 2022-10-30 at 20.49.55.png 314.35 KB


My takeaways:
  • We haven’t even seen an uptick in unemployment (today)
  • CPI has cooled a little, but if you look back, it’s not uncommon for that to happen and then resume - especially if you’re not doing aggressive rate hikes (75bps is not aggressive)
  • The cheap money is switched off.  That’s not coming back for a long, long time - so that’s not what the market is after
  • What the market fears most: rising CPI + rising unemployment triggered by rate hikes.
  • When both of those are coming down, you’re getting a bull run you can tell your kids about
  • With them going up, you’re looking at 23-50% drop to the bottom.  We've seen that once already with the Dow - recent low: 28,600  (-22%); Currently: 32681 (-11%)
  • We’re in September/October 1973.
  • If we get the drop in November (more likely December) drop, then we know for sure
  • So what's the move? A few more weeks up before a big drop (15-20%), bounce half way back up the drop, volatile as hell for another 6 months before another big drop of (25%+), then if we see CPI coming back down AND unemployment going way up, we'll know it's the bottom.
  • I lost my mind a bit on this chart, so take it with a grain of salt.....but I'm playing it.


Helpful links

thebalancemoney.com/fed-funds-...
https://www.investopedia.com/articles/economics/08/yield-curve.asp
https://www.ustreasuryyieldcurve.com/charts/treasuries-time-series+


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Moving to $SPY discussion board

I'm going to move my future market updates over to $SPY discussion board.  I almost exclusively talk about SPX/SPY so it makes more sense, plus we're going to do some snazzy stuff with the view/data there.

https://stonks.chat/symbol/SPY


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Mentions: SPY

Thursday, October 6th Market Preview

What Happened? - 

  • SPY range on Wednesday: 371 to 379.
  • I had pegged Wednesday as a non-event day with little economic data that would impact the markets too much. I was wrong...
  • ADP reports came in hot, with wage rates coming in very hot. OPEC+ agreed to cut production by 2 million barrels a day. And ISM Non-Production came in above expectations. This led to the market to pullback under the 373 support. All was looking good for bears until a big options trade came through for SPX 4500 for Jan 2023. 
  • That trade seemed to spark a rally and pushed SPY all the way back to green for the day. It was another gut wrenching punch for the bears.


What Am I Looking Out For This Week?

  • Fed Pivot Theory is back and better than ever. I hate every part of this, but the markets are rallying on this optimism so we need to take it serious. The next landmine to stop the optimism is the Jobs data on Friday. 
  • Jobs data this week (Tuesday, Wednesday and Friday) will add gas to the fire for the market as all signs are pointing to a hot jobs number with consumer sentiment still strong. Bears need Jobs to stay hot so the Fed can stay comfortable being aggressive. Bulls need a slowing jobs number to put doubts in the Fed's aggressive approach. 
  • The DXY and TNX is on watch. If these two breakdown then the markets will keep rallying. 

Current Positions and Plays:

  • CORE Position: SPX 3600p for 11/18 - I added to this position when SPY was at 378 and will keep building this position if we keep climbing. 
  • Strangle Play - I will do a strangle for SPX at 3pm today in anticipation of Friday's big jobs release in premarket. I will grab both sides slightly out of the money for Friday's expiration date. 
  • Scalps - I am getting back into scalp trading as well when the setups merit it. This means waiting until 10:30am and let my intraday Fibs have some data to work with. 

Economic Data this Week (all times are EST)?


SPY Technicals - 

  • SPY Technicals - The 30 min and 1 hour is almost overbought. The 4 hour and Daily are neutral.  
  • SPY Fibs for ATH to June 2022 low - 362 is the .000 line. Bulls got this level back today and it was a very big win for them. 
  • SPY Fibs for COVID low to ATH - 380 is the .382. 349 is the .500.
  • SPY - The 200 Weekly SMA is 358. The bulls need to keep this level.

THE PLAYS OF THE DAY for THURSDAY for SPY:

  • We don't much on the calendar today so we could see a choppy day. I am looking for derisking to happen in the second half of the day. 
  • I will be waiting until 10:30am and see if I can set up some intraday Fibs and try and identify any scalps 
  • At 3pm I will enter a strangle for Friday's job data. Depending on the derisking at the end of the day, I may get an opportunity to close this out profitably before the bell and then re-enter at the close. 
  • NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this. 
  • This is not financial advice

Levels I am Watching

  • $SPY - levels 360 > 362 > 367 > 370 > 373 > 376 > 380 > 383 > 386
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Economic Events Calendar

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