Let me start with some honesty. I was a fucking idiot with my plays. I held a put overnight in hopes that the EU CPI Data would come in hot and didn't realize that a rate decision would come out of it. A more aggressive rate hike was announced and the Euro shot way up and the DXY died. This killed my puts.
At the open, I realized I was on the wrong side of the market, I made the switch and bought calls at 10am. I sold them just 25 mins later as happy as I could be, and then I realized that I had made a mistake. I bought them back and kept scalping them until the 390 level. Then I got cocky...
I grabbed puts not once but TWICE, and gave back most of my intraday gains. Ended red on a day where SPY ran 10 points. Hence the admission of me being a fucking idiot.
I called this rally last Friday, and I let the AAPL news shake my thesis. This is the second week in a row I have let something rattle me and put too much weight on the story enough to shift my thesis. Just frustrating...
Holding all cash overnight.
Market gapped up yet again and didn't look back. There is not much to say here but Damn... SPY broke through 385 and 390. QQQ motored through 292, 295, and closed above the big 297 level.
The AAPL news from Monday was long gone and the market didn't care one bit about it. Honestly, it just felt like a technical move down when the news was released as we were overbought on the 30 min and 1 Hour charts.
We closed at the highs of the day.
NFLX's earnings were a mixed bag, however the bullish narrative has been set and it was held up by the "well it wasn't as bad as we expected."
Honestly, bears have to be just pissed off today. Everything is pointing the market to go down, and yet here we are with a real shot at a SPY 400 break this week, and QQQ flirting with 300 in afterhours.
What to Expect?
Earnings: TSLA and UAL report in afterhours. Tesla has the markets in its hands.
There is no major US Economic Data this week.
International Events are hot this week so we need to keep an eye on these as it will impact the DXY.
Wednesday - UK CPI and PPI data, GER PPI data, CA CPI data
What Do I Think?
QQQ Technicals - We are near overbought on the 30 min and the 1 hour. 4 hour and daily charts are still neutral.
QQQ Technicals - We cleared 2 Fib levels today, and the next one is 304.87. I am looking for a retest at 297.26. We cleared that major level a little too easily imo.
SPY Technicals - We hit overbought on the 30 min, and the 1 hour is on the edge of being overbought. 4 hour and daily charts are still neutral.
SPY Technicals - We are now comfortably above the big level at 380 for SPY. Next major level I have is 396.33.
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.
I got caught up in the bear hype due to the AAPL news. It cost me dearly.
WTF is Going On (Version 4)?
Wait, so the AAPL news was not bad?
Kind of... it is bad news. But it conveniently was released right when the charts hit overbought conditions on Monday. I think that combination led to the above average selling. The fact that buyers stepped in today and brought AAPL back over 150 is all I need to know about how serious this news is in the short run.
I am so confused... Is the market bullish again?
In the short term, yes it is bullish. A lot of the bearish fears are very much present but they are longer term issues. So this rally has legs for the next few major levels on the indices. Of course, if TSLA comes out with abysmal earnings the market will negatively react. But the odds and conditions are very much in favor of the market bulls in the short term. I am looking to buy the dip for a SHORT TERM play of a few weeks at max. This is still not a market where you are looking for any long term holds.
Ok, what about FOMC next week?
It is pretty clear that the Fed is looking at 75 BPS hike. I know, you know it, and more importantly the market knows it. So the market will move on JPow's words, but as long as the rate hike is not 100 BPS, I expect FOMC to not kill any momentum.
What is the big landmine this week?
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 could explode upward. That will mute any rally we can have. So keep an eye on the DXY. If it drops, bulls can expect this rally to keep going. If it spikes, keep on your toes.
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.
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 weak dollar is good for equities. 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.
THE PLAYS OF THE DAY for SPY:
Scenario 1: We gap down below 390. I am looking at buying the dip here for calls.
Scenario 2: We gap up and break over 397. This should put us in overbought territory on both the 30 min and 1 hour. I will be cautious with my cash and wait for any pullback that will cool those RSI readings.
Scenario 3: We open flat (+/- 2 points). I will most likely wait until 10am to make a play and see if a trend can be identified. I am still looking for a pullback to cool those readings, and I am not in too much of a hurry with TSLA's earnings in afterhours.
I am now only interested in calls. But only on a pullback. The risk reward for both calls and puts here in the short term are dog shit.