samosa 22:22 PM - Jul 12 2022

Wednesday, July 13th Market Preview

Sorry for taking a few days off from doing the previews. I am back and lets get prepped for this big CPI day.

Current Positions and Plays:
  • I scalped SPX puts for a nice profit.
  • Holding all cash heading into tomorrow. 

What happened? 
  • The market had a few swings early on and took a dump near the end of the day and cracked below 380.
  • Oil was way down today, while the DXY popped to 108.50. Keep that drop in oil in the back of your mind.

What to Expect?
  • CPI Inflation Data at 8:30am.  This will move the markets.
  • The CPI has two very important numbers, the headline number which is every component of the report. And the Core number which excludes energy and food. 
  • This is a lagging report, so the data is important, but know that this report is pricing oil when it was at its highest (120+ a barrel). 
  • Oil has dropped significantly this month, so the argument is there for this report to be an abnormality if it comes in hot on the headline number. That argument becomes invalid if the Core also comes in at a hot number. 

What Do I Think?
  • SPY Technicals - We are almost oversold on the 30 min and 1 hour charts. The 4 hour and daily remains neutral.
  • SPY Technicals - 380 level is a major Weekly Fib Level. That is still THE level to watch. As long as we stay above this level, bulls are safe. 
  • SPY Technicals - We got a few more Fib levels to keep an eye on from the 417 to 362 recent trend. The one now in play is 383.
  • I have gone over a more in depth dive into the CPI scenarios in this post:
  • CPI Inflation Data will move the markets. Below are the scenarios I am looking for. 

  • Scenario 1: CPI Topline Number comes in at or below expectations near 8.8% and Core comes in at or below 5.7%. This is a bullish scenario. I will be looking for an initial dip at the open and then grabbing calls for a few weeks out with an end target of testing 400 again. 
  • Scenario 2: CPI Topline Number comes in above 9% and Core comes in near 6%. This scenario is very difficult for me. I think you have to be extra cautious with any move that initially happens, and just play the levels with quick scalps. The oil argument has some merit still in this scenario and we can still get a valid argument that this report is showing a potential top in inflation. 
  • Scenario 3: CPI Topline Number comes in above 9% and Core comes in above 6.5%. Grab puts for a few weeks out and sit back. We are going to set new lows and there will be more pressure for the Fed to raise rates by 100 BPS in the late July FOMC meeting. 
  • As always all of this is my opinion and not financial advice. 

Levels I am Watching
  • $SPY - levels 373 > 376 > 380 > 383 > 385 > 389 > 393
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Bones Tradez

Created By: Bones
Created: Mar 2, 2022
Total Followers: 27
Twitter: @BonesTradez
Options Trader - Not Financial Advise
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