SPY opened up slightly green after AMZN and AAPL reported strong earnings. But the market was digesting a little hotter than expected PCE data.
SPY started a little weak at the bell and then 10 mins later, it started a march to 410. It reaches it, and pulls back to 408, then beings its march again to break 410 and hits 413. The RSI was over extended all day, and I got cooked playing for a bigger pullback.
This was the last day of the month and it saw the SPY have its best month since 2020.
What to Expect?
Premarket Earnings - None
Manufacturing PMI Data at 9:45am EST
ISM Manufacturing Index at 10:00am EST
Afterhours Earnings - PINS, ATVI, MOS (old fling of mine)
Premarket Earnings - UBER, CAT, BP, MRO, JBLU, MAR
Jobs Data at 10:00am EST
Real Household Income Data at 11:00am EST
Bullard speaks at 6:45pm EST.
Afterhours Earnings - AMD, PYPL, OXY, SOFI, SBUX
Premarket Earnings - UA, MRNA, CVS
No major economic data
Afterhours Earnings - LCID, HOOD
Premarket Earnings - K, CROX
UK Interest Rate Decision at 7am
No major economic data
Afterhours Earnings - AMC, SQ, FUBO
Premarket Earnings - DKNG
Payroll Data at 8:30am. This is the big data for the week.
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.
I capitulated again on the puts and am just holding cash now.
What Do I Think?
SPY Technicals - We are overbought on the 30 min, and the 1 hour charts, and the big 4 hour chart. Getting close on the daily chart. This is getting very very overextended.
SPY Technicals - We are now comfortably above the big level at 400 for SPY. We jumped over the 404 level and now looking at the next Fib level is 417.
The market will look for any reason to pullback here. So be cautious and be nimble.
WTF is Going On?
So we made it through the big data week last week with a huge bullish run. Where do we go from here?
Tricky spot here honestly. We are in the clear for the rally to continue from a fundamental standpoint. We do not have any major economic data until the jobs data on Friday. From a technical standpoint, we are way overbought, so I cannot comfortably buy any calls and hold them for more than a few candles. But if we do get a pullback to 408, or better yet 400, it is a good opportunity to grab calls for a few weeks out and ride the momentum.
What could cause a pullback?
Literally anything can cause this market to pullback some. My guess is PINS causes it afterhours on Monday. Monday is the start of the month, so we could see buying trickle in all day. I don't expect much fireworks to happen on Monday, and if we revisit the 414 level, I am grabbing puts and holding them for a few days.
THE PLAYS OF THE DAY for FRIDAY for SPY:
Scenario 1: We gap up above 414. 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 408. 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 408. 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.