Current Positions and Plays:
- Let me just start by saying I fucked up in a big way today. I had some real big dick energy this morning and scaled up on my position size for SPX puts. I was killing it at the open when SPY broke under 373 and I was feeling good about my Camry sized position. Well, then I did not honor my level system and did not sell at level breaks. And a few hours went by and my Camry turned into a used Yaris.
- Holding all cash heading into tomorrow.
- PPI came in hotter than expected. JPM reported nasty earnings. DXY was setting new highs near 109.30. The stage was set for a market to break under 373 and head to lower lows. We got the initial break and then Waller sparked an oversold bounce with his support of 75 BPS hike with the possibility of a 100 BPS hike.
- Then Trump said it is a matter of "if not when I announce my 2024 candidacy"...
- Then the house passed the dead on arrival Marijuana Bill to send over to the Senate....
- Then the Senate said that on Tuesday they hope to vote on the US Chips Bill...
- At this point my puts were about as solid as Michael Jordan's sons being better in basketball than he was.
- Market closed near the highs of the day, with tech leading the way.
What to Expect?
- Earnings: WFC, C, BLK all reporting in the morning. So we will have a lot of movement on the financial sector.
- Retail Data is set to release at 8:30am EST
- UofM Data is coming in at 10am
- Keep an eye on the DXY and see if it moves under 108.
What Do I Think?
- I am switching things up and focusing on QQQ for the next few weeks. The reason is we got a serious rotation into tech today and I think it is a better play to the upside since SPY is going to get negatively impacted by the energy and financial sectors.
- QQQ Technicals - We are neutral on the 30 min, 1 hour, 4 hour and daily charts.
- QQQ Technicals - 286.82 level is a major Weekly Fib Level and we closed right at it.
- QQQ Technicals - We got a few more Fib levels to keep an eye on from the 314 to 269 recent trend. The one now in play is 286.
- QQQ Max Pain is 290 for tomorrow.
- The last few days have been an emotional roller coaster with me jumping between a few dozen different scenarios in my head. Switching from bullish to bearish like a vegetarian trying to be vegan. So I am going to try and data dump some thoughts below in a new section...
WTF is Going On?
- Is 100 BPS hike priced in?
- I think the fact that the market is even discussing it as much as it has, tells me this is getting priced in.
- Ok Cool, but is a 100 BPS bullish or bearish?
- This one has me stumped a bit. I think I am going to be coward and punt this one for a weekend research post.
- Inflation is roaring up, but is it peaking?
- The answer here is no and yes. No it is not peaking, but yes the optimism is there for the next report to be cooler due to the ass kicking commodities have taken since late June.
- JPM had terrible earnings, why the F did we go up today?
- I got bear trapped on that move down. So this one really hurt to answer. The best guess I have is rotation. JPM is the biggest bank and that means their poor earnings were a signal that most of the banks were going to mimic that negative report. So money got out of banks and went pouring into tech.
- Why is tech moving like nothing is wrong?
- Tech is the one sector that has been hit the hardest by this bear market. So a lot of names are attractive at these prices, and this is the one sector that is still managing pretty good earnings reports.
- That's bullshit and you know it. Why would anyone trust tech in this market?
- The best answer I can come up with is simply, there are no major landmines for the next few sessions. So you can actually be safe in tech until next Wednesday when TSLA reports afterhours. So if you are looking to park some money in a sector that can move upward in the very short term, this looks to be the one.
THE PLAYS OF THE DAY
- Scenario 1: We gap up above 287, I am buying calls and playing a bounce for a few days out with a target of 297. If we break 297, this thing is running like Usain Bolt.
- Scenario 2: We gap down and break under 285. Do nothing until 280 or 287 is tested.
- Scenario 3: We open flat (+/- 2 points) I will grab calls and again play a few days out with a target of 297.
- I am not interested in puts for tech here, just given the lack of bearish events ahead on the schedule for Monday, Tuesday and Wednesday (TSLA reports in AH on Wed).
Levels I am Watching
- $QQQ - levels 280 > 285 > 287 > 290 > 293 > 297 > Valhalla