SPY opened up flat and then had a nice pullback to 398.50 to work out some overbought technicals. Then the buyers showed up with a purpose.
SPY closed near the highs of the day at 406.
Then in afterhours, AAPL and AMZN reported good earnings and SPY took off to 409. Just a terrible to hold puts, and guess what I was holding like a jackass...
What to Expect?
Premarket Earnings - Exxon, Chevron, P&G
PCE Inflation Data at 8:30am EST
Consumer Spending Data at 8:30am EST
Q2 Employment Cost Index at 8:30am EST
Current Positions and Plays:
I played puts as I became married to the overbought readings on the RSI on the 30 min and 1 hour. I just kept bleeding money as I watched the market move up to F me in the A.
Still holding puts like a jackass.
What Do I Think?
SPY Technicals - We are overbought on the 30 min, and the 1 hour charts, and the big 4 hour chart.
SPY Technicals - We are now comfortably above the big level at 380 for SPY. We filled the 401 gap and are jumped the 404.40 level. Next Fib level is 417.
WTF is Going On (Version 5)?
What is the updated boxing match score for this week?
Round 1 went to the bears with WMT news. Round 2 went to the bulls with MSFT and GOOG guidance FOMC was worth 3 rounds and I would give it a 2 to 1 favor to the bulls. So the bulls had a 3-2 advantage heading into the day. Round 6 was the GDP report and it came in negative. Which was bullish (more on this below). AAPL and AMZN came in with great earnings and we are now sitting at 6-2 with the Bulls in the lead. So in the biggest week of the year, we had enough bullish wins to push SPY to damn near 410. Unreal week. Last one up is the PCE data on Friday mornings.
GDP report was negative, Why did we go up?
This is the big question on FinTwit and to answer this properly, you have to turn off any biases you have. The biggest fear the market has is that the Fed will Paul Vockler us. If you are not sure who that is, then please Google him and watch every documentary you can on him. Jerome Powell for months has been saying how the economy is strong and how it can handle more aggressive actions. Well this GDP report proves that to be false, so the theory is that the Fed will now back down in September. Whether you agree with that or not, it doesn't matter. All that matters is the price action proved that enough folks with money do believe it.
THE PLAYS OF THE DAY for FRIDAY for SPY:
Scenario 1: We gap up above 408. We should see slight move upward and then the RSI will be so overbought that it will be time to pay those taxes at any moment. If we do drop, expect the selling to be intense to 404. Now this will be the big question as to whether the buyers show up. If they do, and the technicals are ok, then it is safe to grab some calls.
Scenario 2: We gap down below 404. This will work out the technicals and see if the buyers show up. If they do, I will look to jump in calls.
Scenario 3: We open flat (+/- 2 points). This is a sit back and see if the overbought technicals matter. If we start to fall, I will grab some puts.