We got a surprise from NVDA about their upcoming earnings. They lowered their guidance and hinted at a revenue miss due to a decrease in gaming demand.
Market shrugged it off and ripped up to a new trend high over 417, and the meme stocks started to really move. The first hour or so was peak FOMO in the markets. We have not seen that in quite some time.
But the euphoria started to fizzle and the market dropped quickly to test sub 412 at one point. We closed near the big support of 413.
What to Expect on Tuesday?
Wednesday has the CPI data release in premarket. Nothing really matters until then.
Current Positions and Plays:
I am still in SPX 4100 puts for 08/17 and ARKK 45 puts for October.
What Do I Think?
SPY Technicals - We are just outside of overbought on the 4 hour and now neutral on the 30 min and 1 hour. The Daily is also getting overextended.
SPY Technicals - The chart to watch here is the 4 hour imo. This is now starting to show red impressions on the MACD and looks to be finally getting a pullback to clear up the overbought technicals.
SPY Technicals - All eyes on the 413 and 410.50 levels. Break under 410.50, it is a quick stop at 408 and then 400. Hold above 413, and we are testing 416. Break 416 and its off to 420.
WTF is Going On?
So CPI is on Wednesday, what is your take?
This is feeling like a big ol' bear trap. I expect the topline number to be less than the previous months by quite a bit due to the drop in oil prices. So it is all about the Core number. If that number is not hot (higher), the market will start its peak inflation narrative. That will rally the markets. If the Core number comes in higher, the market will dip to key supports on the indices (SPY 400? possible 396) then bounce from there imo. So either way I am looking for a bounce.
THE PLAYS OF THE DAY for TUESDAY for SPY:
Scenario 1: We get above 415. I will grab some more puts and hold them into the close. We are going to de-risk heading into CPI.
Scenario 2: We get down below 410. I may take some profit here. But I am trying my best to hold these puts until the close.
Scenario 3: We open flat (+/- 1 points). Just sit back and keep with the selling plan at the close.
NOTE: I am turning into a swing trader for various reasons, so please keep that in mind moving forward. My options plays will be always a few weeks out because of this.
NOTE #2: I would recommend selling any short term options ahead of the CPI release on Wednesday. It will set the trend and will move the markets in a violent direction one way or the other.
Levels I am Watching
$SPY - levels 396 > 401 > 404.40 > 408 > 410 > 413 > 416 > 420 > I refuse to go higher on the levels.