Maverick 02:05 AM - Jul 21 2022

Market Day Ahead - July 21, 2022 - SPY - 390/400 range; ECB rate hike + DXY will move the dial.

What Happened Today (Wednesday)
  • SPY traded 391 - 396
  • 🏆Scenario 1 was the winner, or close enough: “If we [open] at/below 395, calls to 398/400 (max).  Then it’s time to find a puts entry.”
  • Sadly, I didn’t play it, didn’t believe it was correct.  Had two bad entries in puts and only made it out with a profit because GOOG gave me a gift around noon (pausing some hiring).  Had I listened to Scenario 1, I would have been up 3x what I was.  Grrr…
  • VIX was down, but DXY started climbing up off that 106.40 bottom today. It closed around 107..  This is the one to watch for right now (esp tomorrow)
  • The market otherwise grinded sideways all day in a tight range (options crusher)
  • TSLA reported afterhours.  Beat on profit, light on revenue.  Stock was up +10 in the end.  I’d say it’s just showing some cracks….which they all are.

Looking Ahead (Thursday)
  • Reports: ECB (European Central Bank) meeting (for rate hike); Lagarde speaks @ 0845.  Normal Thursday US data at 0830.
  • Earnings: Numerous industrials/Dow in premarket
  • I expect the ECB to announce a 0.50% rate hike.  This will move the DXY down (106 again?) and equities up, if so.
  • Let’s look at the charts for tomorrow
  • SPY levels:  380 (major) > 385 > 390 (major) > 393 > 398 > 400 (psych) > 410 (major)
  • Chart - Weekly: Neutral/Bullish - it’s actually breaking up, though still weeks before a cross up.  I remain skeptical, but Hot Girl Summer is looking likely.
  • Chart - Daily: Bullish.  Found direction.  Lots of room on RSI/MACD to keep going.
  • Chart - 4h: Neutral - getting toppy.
  • Chart - 1h: Bearish - just got out of overbought today.
  • Chart - 30m: Same
  • “Without a fresh fundamental event, I think we’re coming down before Friday close, well under 395.” (Yesterday) OK, we got that with the 391 print today, that got us out of overbought territory.  I think there’s more to go in the before Friday looking at 30m/1h charts.
  • I think the primary mover on Thursday will be ECB hike + DXY.  DXY down, equities up.  The majority of the move will likely be done in futures/premarket, so be careful about jumping on a rally late.
  • The best thing that could happen (for bulls) is a pullback soon - Friday/Monday.  If we're going into Big Big Tech Earnings in overbought conditions, that's not going to pan out well.  Coming from a place of consolidation/neutral technicals will get it much higher and hold.

SPY Trading Plans (Thursday)
  • Scenario 1: If we open at/above 395, calls to 398/400 (max).  Too risky beyond that.
  • Scenario 2: If we open below 390, I’d need to see what caused it, first - then as long as it’s purely technical, I’d be looking at calls.  
  • Scenario 3: We open around 400 (possible if DXY drops big), then give it 30 min to top out and look for entry on puts because it’s going to pay its 30m/1h taxes at some point.  I’d be looking for 3-5 points.
  • Just a reminder that it’s earnings season, so don’t get too stuck in a direction and keep in mind this bull is still in rage mode.

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Comments

Maverick - 1 year ago
July 21 recap:  Scenario 1 was close, but not optimal. "If we open at/above 395, calls to 398/400 (max).  Too risky beyond that."  Dip after the open was a bit more than expected.

P&L: +$780
Maverick - 1 year ago
I think a big ass rally is coming at some point after FOMC.  We need to pull back first...but then..it's on.  Even though I'm a bear.

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Created By: Maverick
Created: Feb 8, 2021
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I trade SPY, QQQ, and specific story sectors using technical analysis and gut rubs.

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