Weekly Market Preview - February 27th, 2023

Last Week Recap - 

SPY had a weekly range of 404 to 393, closing just above 396. This was a week where the bears finally flexed some muscle and pushed the SPY under some key levels. The macro data came in hotter than expected on the inflation front with the PCE release on Friday. Also GDP came in under expectations on the Q4 revision. So that puts CPI, PPI, PCE all coming in hotter in January while GDP got revised lower. That was clean sweep for macro data for the bears in February.

So does the recent macro data open the door for the next leg lower in this bear market? Let's breakdown that question below by visiting the bullish and bearish arguments in a 2 week, 1 month and 3 month outlook. 

Bearish Thesis - 

  • 2 Week outlook 
    • The inflation data we got the past few weeks tells the market that the current rally was completely off base. So there should be a correction back to at least SPY 390 in the near term. This would put us right back in the chop zone that we were in prior to the FOMC February meeting. 
  • 1 month outlook 
    • This is all about the FOMC meeting in March. If we get a economic projection of the Fed funds rate over 550 BPS, then that will signal to the market that they were again way too premature on predicting a rate pause or cut to be within the next 2 meetings. This should cause a move back to SPY 380 as long as JPow maintains his 2% inflation mandate stance in the presser. 
  • 3 months+ outlook 
    • Regardless of the Fed's decision in March, the data is showing that inflation is not only sticking, but is also rising again. So inflation is showing that it is control, so no matter how the market wants to spin the narrative, if inflation is not dealt with, it will crush the consumer. There is no magic bullet that will get it under control outside of a recession. So bears are playing for the inevitable recession. 

Bullish Thesis - 

  • 2 Week Outlook
    • Yes, inflation data came in hotter than expected, however QQQ did not break under its 200 day SMA and the charts are looking slightly oversold on the shorter timeframes. With no major economic data this week, a bounce is likely to happen at the current support. 
  • 1 Month Outlook 
    • Inflation is in control so no landing is here! This will be the bullish narrative to allow them to dismiss the hot inflation data. Even if JPow says that 2% is the mandate in the March FOMC meeting, bulls will not believe him. He is closer to pausing rates and then he will just live with the results for a year with the rates at 5 to 5.25%. This will create a sweet spot where the Fed signals when it is pausing regardless of the current inflation reports, while the consumer is strong and unemployment is low. 
  • 3 Month Outlook
    • The no landing sticks, then we know that only a natural recession will bring the markets down. The Fed will not manufacture the recession and it will be up to whether inflation can stay back long enough for the consumer to stay strong. The theory here is that inflation is and was ultimately a supply side issue and those issues would be resolved by then. If this is the case, and inflation starts to slightly tick down while the Fed has paused, the market will explode higher as they will anticipate that a major recession will not happen. It will only crash or come down once the consumer has slowed down by the sticky inflation, thus causing an economic recession. 

I do not agree with one side of this narrative, but it is important to present all sides of the argument. Over the next few weeks, I will keep building and updating these narratives. 

My Prediction - 

We do see a bounce at support for SPY to ultimately get us back over 400. I am looking for that bounce this week. The bulls have the stronger 2 week outlook imo, while the bears have the stronger 1 month outlook. So I am playing the potential bounce for the next 2 weeks and looking at playing it very cautious with tight stops. 


Economic Data this Week (all times are EST)? - 

  • Check the full calendar here. We have a lot of Fed Speakers this week:  stonks.chat/feed/catalysts
  • Monday - EU Economic Statement at 5am (DXY implications)
  • Monday - Durable Goods Orders at 8:30am
  • Monday - Dallas Fed Man Index at 10:30a
  • Tuesday - Retail and Wholesale Inventories at 8:30am
  • Tuesday - Chicago PMI at 9:45am
  • Tuesday - Consumer Confidence at 10am
  • Wednesday - SP PMI at 9:45am
  • Wednesday - ISM Man PMI at 10:00am
  • Thursday - EU's Inflation Report at 5:00am (DXY implications)
  • Friday - SP and Non-Man PMI at 9:45 and 10am

Current Positions and Plays -

  • I am holding 1 NQ long. Looking at scalping this all the way up if we start to rally. I will close it out ahead of the data releases each day. I am much better at reacting to data, then predicting data. 

SPY Technicals - 

  • SPY Technicals - The 30 min and 1 hour are neutral. 4 hour is close to oversold on RSI but the MACD is curling down. Daily chart is at neutral on the RSI but MACD is curling down.  
  • SPY has closed under its 50 MA average but is still above the bear market trendline and the 200MA on the Daily chart.
  • SPY Fibs for Dec 2022 low to 2023 high (current rally) - We are right in the golden zone for a bounce at the 50 line and 61.8 line. Purple fibs on the chart. Those levels are highlighted in gold. 
  • SPY Fibs for ATH to June 2022 low - 389 is the .236 line. 407 is the .382 line. Light green fibs on the chart. 
  • SPY Fibs for COVID low to ATH - 380 is the .382 line. 416 is the .236 line. Gold fibs on the chart. 

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Percentages from the Highs

  • SPY is approximately -18% (479 HIGH)
  • QQQ is approximately -28% (408 HIGH)
  • DJX is approximately -11% (369 HIGH)
  • IWM is approximately -24% (244 HIGH)

Levels I am Watching

  • $SPY  - levels 390 (major), 393, 396, 400, 405, 407 (major)
  • $QQQ  - levels 290 (major), 293, 296, 298.50, 300
  • NOTE: I have turned back into a daytrader. I love playing ES and NQ futures. 
  • This is not financial advice
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Mentions: SPY QQQ

Thursday, August 11th Market Preview

What Happened? - 

  • CPI came in lower on the headline number and lower vs expectations on the Core. Market rocketed up to over 418 at the open. 
  • The very interesting thing here is that we not only moved so much in premarket but we held it all day long and closed near 420. That is a very bullish sign. 
  • We are at major resistance on the QQQ, so we will look more into that in the technical analysis section below. 

What to Expect on Tuesday?

  • We have PPI in the morning. This could pour some cold water on the bullish move we got today, but I am not seeing it as a major indicator honestly. 

Current Positions and Plays:

  • I am all cash heading into tomorrow. Just waiting on confirmation on whether we break above this QQQ resistance. 

What Do I Think?

  • SPY Technicals - We are just outside of overbought on all the major charts, 30 min, 1 hour, 4 hour and on the Daily. 
  • SPY Fibs for ATH to 2022 low - 421 is the .50 and 435 is the .618. 
  • SPY Fibs for COVID low to ATH - 418 is the .236. I hated every second of this @mcarter.

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  • QQQ Technicals - We are just outside of overbought on all the major charts, 30 min, 1 hour, 4 hour and on the Daily. 
  • QQQ Fibs for ATH to 2022 low - 339 is the .50 and 322.54 is the .382. 
  • QQQ Fibs for COVID low to ATH - 315.59 is the .618. Looking at this as support. 

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WTF is Going On? 

  • CPI has been released so where are we headed?
    • This is the billion dollar question. First we need to answer a few questions. 
  • Why we moved up on a CPI reading that is still at 8.5%?
    • Two words sums up why we moved up, New Data. The market has the old data, the higher data and is going to react to updated data. And the inflation data came down, and more importantly the core came in flat from the previous month's number. Peak inflation narrative now has data to back it up. Fed's current rate hike plan now has data to back it up. So more importantly this puts ice on any emergency rate hikes or 100 BPS hikes in September. 
  • Is that CPI Reading enough to move us up any further?
    • This was the big data release for this month. Inflation is the key thing the Fed is focused on controlling. So yes this CPI number offers optimism in the Fed's plan. So will it be enough to break over some technical resistance? That is what I am looking for. There is a lot of money on the sidelines, and does this start bringing that money back into the market. I think if SPY closes the week over 420, it is a big bullish win. 
  • Ok, so what can bring us lower?
    • We will answer this question that no black swan events come in. We have the PPI tomorrow morning and that can pour some cold water on the market, but it is not a major data release. The next major landmine is looking like the statement out of the Jackson Hole Symposium from JPow at the end of this month on the week of the 22nd. Then we have PCE data afterwards. Bears only have technical resistances now to hang their hat on. We are overextended on the charts and it is ripe for a major pullback. But until that starts, don't guess on it. I lost $10k guessing it for the last two weeks. 
  • So what is your plan?
    • I am watching QQQ like a hawk. If we break above 327, then I am going to play calls up to 335. When we hit that mark I will start to build a long term short position since the VIX will be low. This market will cool off and face reality that the bear market is not over due to QT and more Fed tightening. I don't know when exactly it is coming down, so I will make sure to give myself enough time. If we start to reject heavy at 327 and can't break over it, then I will play the downside as the current resistance at 327 is valid.

THE PLAYS OF THE DAY for THURSDAY for SPY:

  • Scenario 1: If QQQ breaks 327, grab calls up until 338. This will take a few days, maybe even a few weeks. So I will grab longer dated expirations. I like playing the SPX here on the upside as it has other components to keep it propped up. 
  • Scenario 2: If QQQ is rejected at 327. Grab calls for a short term scalp for a play to 323. Then see how it handles that level as that is key support. 
  • 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. 

Levels I am Watching

  • $SPY - levels 404.40 > 408 > 410 > 413 > 416 > 420 > 422 > 427 > 431
  • $QQQ - levels 302 > 308 > 313 > 316 > 320 > 323 > 327 > 338
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Mentions: QQQ
Bones Tradez 2 years ago

Wednesday, June 1st QQQ Preview

What happened? 
  • Just read yesterday's post in the "What Do I Think" section 🤪. 
  • But in all seriousness, we opened up with a nice move upward for just a few minutes and then the selling came in and dropped QQQ below 305.
  • Once QQQ established support at 305, it started a really nice bullish move for a few hours to 311. 
  • The Biden JPow meeting turned into a nothing burger with Biden saying he is staying out of the Fed's way. There was some fear that Biden could step in and force a more aggressive Fed, but this clearly was not the case. 
  • The market did cool off a bit into the close, but not enough to end this nice rally. QQQ closed well above 305 and SPY above 410. 

What to Expect?
  • Job data is at 10:00am EST
  • Bullard is talking at 1pm EST
  • Fed Beige Book release is at 2pm EST. 
  • QT starts, but it is not a major factor imo. $45 billion is nothing to the market in a month. For context, it would take the Fed 200 months to fully get back the amount of money they just put into the market if they stuck with $45 billion. Remember, just because it is a big number to you, doesn't mean it is a big number to the market. 

What Do I Think?
  • We are still following the March 18th trend upward so I am going to stick with this as a roadmap as long as no new data derails it. This week has no real major landmines from a data standpoint and the stage is set for this bear market rally to continue. 
  • I am looking at calls near the open, UNLESS we get some new data that surprises the market and turns is bearish. 
  • I expect a very strong green day tomorrow with a possible 5-7 point move on the $QQQ.

Levels I am Watching (same as yesterday)
  • $QQQ - for calls 305 > 309 > 311 > 315
  • $QQQ - for puts 300 > 297 > 293
  • $QQQ price target for a current rally is still 325
  • Reminder Note: This rally could take a few weeks and we have no real major data events on the economic calendar for 2 weeks. 


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Mentions: QQQ
Bones Tradez 2 years ago

Wednesday, May 17th QQQ & SPY Preview

What happened?
  • Futures gapped way up on Monday night and setup a nice bullish day for the Indicies
  • JPow had a press conference that ultimately confirmed his hawkish stance and once he was done, it sent the market upward. 
  • We are in a bear market rally. 23 point move on the SPY in 3 days is wild. 

What to Expect?
  • Nothing major on the fed calendar for Wednesday. 
  • Earnings for consumer services giants Target, Lowe's, TJ Maxx, and a few others. 

What Do I Think?
  • QQQ held the 301 support today and proceeded to move higher on lower than average volume. This looks like a move to entice retail investors to buy this rally up. I will not be surprised if we hit 317, if the retail crowd gets over it's PTSD from the carnage of the last few weeks. Looking at calls if we move higher in futures tonight. 
  • SPY held 403 beautifully and rocketed up to close above 408.  Energy sector really helping push this a little higher than QQQ. Just the same as the QQQ, SPY is now looking for any dip busts to move it higher. I think they start to show up tomorrow. 

Levels I am Watching
  • $QQQ - for calls 305 > 307 > 310 
  • $QQQ - for puts 305 > 301 > 298
  • $QQQ price target for this rally is 317
  • $SPY - for calls 407 > 410 > 412 
  • $SPY - for puts 407 > 405 > 403
  • $SPY price target for this rally is 420

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Mentions: QQQ SPY

Market Update: April 28, 2022 - QQQ puts on Friday; adding commodities.; Fed next week.

What Happened Today (Thursday)
  • SPY/QQQ - danced around until noon - then just roared after that.  Almost in a straight line.  I was thinking short covering ahead of AAPL and it might have been partially that, but this was best explanation I ran into: https://twitter.com/MacroAlf/status/1519753565635596289
  • Trade: I played $QQQ  puts out of the gate since it popped and GDP numbers were bad.  This worked.
  • Trade: I played (poorly) $SPY  calls, but still came out OK.  What I was expecting at the open happened at 12pm instead.  I watched in awe as it just. kept. going.  Bravo, SPY!
  • This also started bringing my CTRA and LAC plays to life.  Still down on them right now, but they popped up a bit.  The market was dragging these two by their teeth, which I appreciated it, but not very bullish.
  • This might not be so bad - more on that in the Looking Ahead.
  • The most important earnings of any season - AAPL - were this evening - and while they beat, there were little nuggets in there that concerned the market. https://www.cnbc.com/2022/04/28/apple-aapl-earnings-q2-2022.html
  • All around AAPL, earnings reports were missing - AMZN, ROKU, etc.  It’s just getting going, in my opinion.
  • Apple was strong and optimistic even, but they probably aren’t the best predictor of “everybody else” due to their sheer size, pricing power, and supply chain swing
  • There were a few hits - QCOM, FB - but I don’t consider FB’s positive - it was just “not as bad as they thought”

Looking Ahead (Friday)
  • QQQ puts - that’s my move on Friday.  AAPL for once let the market down so I think we’re in for some drilling.  There may be some end of month mechanical stuff, but it should be limited - it looked like most of that happened today. (See Twitter link)
  • We’ve got PCE data on Friday at 0830 am - obviously going to be higher
  • We’ve got the scariest man in the market talking FOMC meeting next week on May 4 - JPow.  It’s a bit tricky because they’ve set expectations pretty high that it’ll be at least 0.50 and maybe 0.75.  However, you did have the bad GDP number today and they can’t ignore these missed earnings and keep with the rhetoric “economy is strong” - nonsense.  It’s peaked and coming down.
  • So, I lean towards JPow holding no punches on interest rate hike and starting balance sheet during summer - but the market may react to the 0.50 (vs 0.75) as positive?  Again, tricky.  I’ll do more homework over weekend.
  • Money always chases something.  If the DXY (Dollar Index) will ease the hell up a bit + tech pullback, I’d expect to see a run on commodities - all of them.
  • Natural gas and Lithium (CTRA, LAC) are my current plays, but there might be better ones (OVV seems to move better than CTRA).  I’ve got positions in these, so just going to sit tight.  I may average down if my view is confirmed.

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Mentions: QQQ SPY

Market Update: April 12, 2022 - SPY to 433 after relief rally; AFRM, CTRA, LAC on watch

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What Happened Today (Tuesday)
  • SPY was almost perfectly opposite of what I called last night - drop at the open, and run at the close.  Instead we got pop at the open (premarket) and drop most of the day.  However, I’ll give myself a little credit for recognizing I had it backwards once CPI data was released - and that’s how I traded it.  Puts from the open, on. 🔥
  • Trade: SPY/QQQ - puts only, right until the last few minutes.  I didn’t stay in my couple trades very long, should have.  I really do need to learn to stay in longer with the golden tickets that I know are right. $SPY  $QQQ  for trades.
  • ⚠️QQQ gave up 343 support today, SPY gave up 438, but clawed it back right at the end.  Both important levels for the bulls & bears.
  • Trade: $LAC  - exited this right at the open on the $1 pop.  I had averaged down quite a bit and that ended up working out.  Exited at 4 (from 3.88), which ended up being fortunate timing, because it closed at 2.80.  I’ll be back in this one when the chart looks better.
  • Trade: $CTRA  25c 5/20 @ 4.25 - These were real good to me on Friday.  I think we're got a rotation into commodities in progress, so I jumped back in.  It was a bit too early by the looks of it.  It pulled back all day long.  We'll see how this one shakes out.  There's plenty of time on the expiry, but I have no interest in using it. 😅


Looking Ahead (Wednesday)
  • We’ve got PPI (Producer Price Index) at 0830 EST.  This will have some impact, but it’s not CPI.
  • I’ve got my CTRA calls, but not expecting them to move too much on Wednesday.  If they’ll just hold the line, I’m happy hold them over the weekend.  Unlikely to happen, but I can try.
  • SPY/QQQ - I switched over and did one call just before the close for 12% on SPY.  It was a small position, but the turned looked clear.  This should continue into Wednesday.
  • JPM does have its ER in premarket.  It could move DIA/XLF if it surprises.  I’ll have AFRM ready to go, if so.
  • SPY/QQQ - I say relief rally in the morning… +4-5 points?  It may hold it all day and just chop, but if it doesn’t come pullback by EOD, then I am expecting Thursday or Monday at the latest to pullback.  It looks clear to drop to 433 on SPY and 333 on QQQ.
  • I expect we’ll see those numbers within 2-3 trading days.  On shortened weeks and lighter volumes as you get closer to holidays, it’s always a bit more volatile.
  • Watchlist: AFRM (if JPM surprises), CTRA (my commodities play), AMD (quick bounce only), LAC (looking for 28 bottom)
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Mentions: SPY QQQ LAC CTRA

Market Update: March 22, 2022

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Followup to Week Ahead: March 20, 2022

What Happened Today (Monday)
  • Monday-Friday: We've got Fed Presidents speaking all over the place.  Just look at calendar and expect one of them to go off script and the news to pick it up with a fun headline.  JPow on Monday and Wednesday.
  • That happened!  JPow came in with quite a hawkish tone at his 12pm conference today - cnbc.com/2022/03/21/powell-say... 
  • I wasn't expecting that kind of tone from him, but as I said...somebody was going to go off script this week - and it's only Monday.  He took a tougher line on inflation than his FOMC speech, mentioned 0.50% hikes as possible (needed, in my opinion), and the market was caught off guard.
  • The QQQ went from 351 to 346 in minutes - tech will get punished the most by rate hikes.  SPY went 446 to 440.
  • In no surprise to anybody, the QQQ/SPY recovered almost all of it by end of day. Bulls are running right now...
  • Trade: Speaking of which, my overnight hold on $QQQ puts went poorly.  I sold the initial pop in the morning (high of day) just before it jumped off a cliff.  Ah well.  Puts are always my toughest plays.  I'm a calls guy at heart.  Which makes it tough with my bearish stance at the moment!
  • Trade: I cleaned up on $AMD calls intraday, though.  It's a powder keg.  I couldn't resist holding some overnight, as well, headed into the NVDA Investor Day tomorrow.  I'll be out before the event, though, because these things are normally sell the news events, regardless of what magic they unveil.
  • Trade: Added some $LAC to hold long-term (we'll see how long that actually is) at 30.17.  Big fan of this one.  Coming off that 24 bottom which I've been staring at for days.
  • Trade: I exited $IPI disgustingly early at 14.25 (from 13).  It went to 26 by end of day, just didn't stop moving up.  It had no exposure to Canada, so it was 'the' fertilizer play.
  • Ukraine/Russia - I didn't see any improvements here.  Same situation, though I'm sure we'll hear about more 'talks' this week.  I think the market is losing interest on this topic - for now.

Looking Ahead (Tuesday)
  • We've got three Fed presidents talking at various times on Tuesday.  No JPow.
  • I'm primarily focused on AMD tomorrow.  The NVDA event is at 10am PST (1pm EST). I will be out well before that.  I also need to check on when they actually release information for the event.  Before? During?
  • I'll be sitting back and waiting for a pullback on $MOS and $IPI - both are in overbought territory now - but there's an overriding, major fundamental event in progress.  So I might be waiting for a while.  I'll do it, though.  When the technicals kick in, it's fierce.
  • Chart: That JPow dip worked out some overbought conditions.  While it didn't feel like it, we did close red today on both SPY/QQQ.  That was needed.  I think we see more consolidation on Tuesday with a bend towards upside, especially on QQQ.  
  • We are right at the 200 on the SPY -- 446.  Once that breaks, we're going right to 450.
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Mentions: QQQ LAC IPI

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