Current Positions and Plays:
- I played an SPX put at the 380 level early in the morning and held it all day. My entry was poor and I ended up holding overnight. All week I said the one day to not hold overnight was Wednesday and I convinced myself to do it anyways....
- Holding a SPX 3810p for 07/08
- The market opened up slightly green and tested 382.
- The GDP revision data came in a little worse and JPow had a roundtable with other global central bank leaders at the ECB Conference. Both of these events ended up being a nothing burger.
- We hugged 380 all day and it is clearly the line in the sand heading into the PCE data release.
- DXY broke above 105 and the 10 Year dropped. This is telling me money is moving to the bond market again, which is bad for equities.
What to Expect?
- Futures have gapped down Thursday morning ahead of the PCE release. Crypto and European markets are down bad, which could make the rest of the day very painful for bulls if that PCE release comes in hot.
- Thursday - PCE inflation data is released in premarket (this is the Fed's preferred metric)
- Thursday - End of the quarter, so I expect some volatility.
What Do I Think?
- SPY Technicals - Neutral on all the major timeframes. 4hour and Daily charts.
- SPY Technicals - We closed at the 380 level which is a major Weekly Fib Level.
- It is all about the PCE data release to me, so below are the scenarios I am looking for:
THE PLAYS OF THE DAY
- PCE data Scenarios
- Scenario 1: If it comes in at expectations. This could trigger a bounce at the 375 level as we have already moved 15 points down this week. There are so many factors that go into the PCE, but I assume the Core Number will be the bull's hope for a positive catalyst since it excludes Food and Energy.
- Scenario 2: If it comes in above expectations (a hot reading). Buy puts for a few weeks out and sit back. We are headed to new lows.
- Scenario 3: If it comes in below expectations (a cool reading). Buy calls for a few weeks out and sit back. We are going to fill some gaps.
- The end of the quarter brings some volatility to today.
- As always all of this is my opinion and not financial advice.
Levels I am Watching
- $SPY - levels 363 > 368 > 370 > 373 > 376 > 380 > 385
- SPY 3 Year Weekly Chart below with Fib Levels.