Current Positions and Plays:
- I was holding calls on QQQ and they opened up nice and green at the open. I had all intentions to hold them until a 297 test, but that tricky VIX was also green. That scared me like when my wife looks through my internet history and I locked in the profit.
- QQQ broke down under 294 and AAPL broke under 150, so I grabbed puts and scalped them all the way down.
- Holding SPX puts for 3820 for 07/28 for an overnight swing. I am counting on a hot EU CPI number to push the DXY up.
- Market gapped up again and hung out for the first half of the day at the QQQ 294-295 levels. We were in a tight 2 point range for most of the day, and then...
- AAPL rattled the market with news that they are limiting hiring and funding for certain teams (projects?) into 2023. AAPL started falling, and so did the market. The intense selling was coming in fast and fierce and we were breaking levels like Usher was breaking hearts in the early 2000s.
- We closed near the lows of the day.
What to Expect?
- Earnings: JNJ, LMT, CFG all reporting in the morning. Not much here but JNJ for some guidance.
- Earnings: NFLX reports afterhours. This is the big, sexy earnings report for retail.
- There is no major US Economic Data this week.
- Chips Bill is set to get voted on in the Senate on Tuesday. This is an obvious tech catalyst.
- International Events are hot this week so we need to keep an eye on these as it will impact the DXY.
- Tuesday - EU CPI data, UK Bank Chair Speaks
- Wednesday - UK CPI and PPI data, GER PPI data, CA CPI data
What Do I Think?
- QQQ Technicals - We hit overbought on the 30 min, 1 hour and then we dropped hard back to neutral. 4 hour and daily charts are still neutral.
- QQQ Technicals - 286.82 and 291.92 are levels on a major Weekly Fibs. We closed right in-between them at 289.40.
- SPY Technicals - We are neutral on the 30 min, 1 hour, 4 hour and daily charts.
- SPY Technicals - The big level is 380 for SPY. We are still above it, but if that level is broken... look out below.
- AAPL changed everything, and completely killed all the bullish momentum. It is really tough to be a bull here for more than a few hours honestly.
- Keep an eye on the DXY tomorrow. With the EU CPI data set to come in the morning, we could see the DXY rocket up on a hot read. This will be bad for equities.
WTF is Going On (Version 3)?
- What did AAPL just Do?
- AAPL just confirmed that the itch the market has been feeling was in fact a STD. When the biggest company in the US announces that they are expecting economic turmoil and announce a reaction to it by limiting jobs and funding into 2023, that is a big hit to any market bull's thesis. Any market rally that happens has to include AAPL for it to be sustainable for more than a few hours. So all eyes are AAPL the next few days to see if it can show a pulse.
- You Keep saying DXY, What is that?
- The DXY is the US Dollar Index. This historically has been an inverse indicator for equities and commodities. A strong dollar means a lot of things, and in this environment, it is serving as THE safe haven for all global markets. As other countries see inflation spike and their supply chains disrupted, it is further fueling the strength to the dollar as the only true stable global currency. In the long run though, this is very very bad. But we will get into that in a future post.
- What is the big landmine this week?
- We do have the CHIPS Bill as a catalyst on Tuesday. It is easy to have bullish blinders on looking at the US calendar. BUT, we need to watch the. international inflation data. If the EU and UK come in hot, the DXY will explode upward. That will mute any rally we can have. So stay on your toes and don't be too biased.
- Is 75 or 100 BPS coming up next week?
- As much as 100 BPS was getting attention after CPI, it appears the Fed is still looking at 75 BPS. A few Fed officials have come out and hinted at support of 100 BPS, but have pushed strongly for the 75 BPS hike. The one member that came out and outright supported 100 BPS, is not a voting member.
- 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.
THE PLAYS OF THE DAY for SPY:
- Scenario 1: We gap down below 380, I will sell my puts and lock in profit. If we re-test 380, I will look to see if this level turns into resistance to enter some more puts.
- Scenario 2: We gap up and break over 385. I will sell my puts for a loss and sit back and make sure this tech rally has some more legs in it.
- Scenario 3: We open flat (+/- 2 points) I will hold my puts and wait and see how the market is reacting to the all the bearish sentiment. I will be locked in on AAPL to see if it can recover from the beating we took on Monday.
- I am only interested in calls if we break 385, or if we test the big 373 level again.
- This is not Financial Advice
Levels I am Watching
- $QQQ - levels 280 > 285 > 287 > 290 > 292 > 297 > Valhalla
- $SPY - levels 373 > 380 > 383 > 385 > 390 > Valhalla