SPY started a little weak at the bell and then 10 mins later, it started a march to back above 410. It set a new high in this recent trend to 413.41. And then finally we got some selling pressure.
SPY broke under 410 and then hung around 411 near the close. Overall it was a pretty flat day with some hints at a possible bigger selloff coming.
What to Expect?
Premarket Earnings - UBER, CAT, BP, MRO, JBLU, MAR
Tesla Monthly Delivery Numbers (Not 100% sure about the release here, but historically they come out on the 2nd)
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 again on the overbought technicals and got a nice profit. Then I went back in for an overnight swing and got caught in a run from 410 to 411.
Holding SPX puts going into Tuesday.
What Do I Think?
SPY Technicals - We are now neutral on the 30 min and 1 hour charts. The drop we had, worked out the technicals on those charts. We are still overbought on the big 4 hour chart. Getting close on the daily chart. One more 4-5 point drop will work out the technicals 4 hour chart.
SPY Technicals - We are now comfortably above the big level at 400 for SPY. We are seeing selling pressure at 413 for the last few sessions. We are looking at a breakdown under 410 and possibly under 408 before we see another move higher.
WTF is Going On?
Jobs Data is in the morning, what should we expect?
This is a key data point for this week. Keep this in the back of your mind when you are determining how the market will react, good news is bad news and bad news is good news. If we have above expectations in Jobs Openings and Quit Data (bad data), the market will react positively to this. This means a weaker economy which means a less aggressive Fed. The Fed is the major fear of the market and any hint at a dovish Fed will move the market upward. The theory is that a weaker economy means that JPow and the Fed will be more timid to be aggressive since the economy can no longer handle it.
Well we got the pullback, and the technicals are working out, so Calls?
Not quite yet. The 4 hour chart needs to cool off still and that will require a 4-5 point move downward. Until that chart cools off, you cannot comfortably be in calls for more than a few moments. Tomorrow could be the day though that we see the pullback.
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.
THE PLAYS OF THE DAY for TUESDAY for SPY:
Scenario 1: We gap up above 413. This will keep the 4 hour chart overbought and again I will take my beating and hold my puts and wait for the pullback. I have time on the my options, so I don't mind taking some short term hits on them.
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 sell my puts and jump in some calls.
Scenario 3: We open flat (+/- 2 points). This is a sit back and see if the 4 hour chart overbought technicals matter. If we start to fall, I will be a happy boy with my puts.