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.
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.
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
Moving to $SPY discussion board
I'm going to move my future market updates over to $SPY discussion board. I almost exclusively talk about SPX/SPY so it makes more sense, plus we're going to do some snazzy stuff with the view/data there.
https://stonks.chat/symbol/SPY
https://stonks.chat/symbol/SPY
Mentions: SPY
Monday, June 6th Market Preview
What happened?
- Friday saw some fireworks with Elon Musk's comments about the economy and Tesla looking to downsize their salaried staff by 10%. That set the stage for a red day.
- The market dropped to key levels on both the QQQ (305) and SPY (410) and held them extremely well.
What to Expect?
- No Fed events scheduled for Monday and honestly nothing really major until Friday's CPI data.
- AMZN has completed its 20-1 split with the new price being present on Monday.
- Fed Speakers are in a quiet period this week since FOMC is next week.
What Do I Think?
- As red as Friday was, there was something that stuck with me all weekend. We had a wild week last week of unforeseen landmines with Dimon's hurricane comments, Brainard's comments on not slowing rate hikes, Fink's comments, MSFT lowering guidance, EU inflation, OPEC+ increasing supply, QT fears, Musk's "super bad" economic outlook comments and still pushed through it all. Incredible strength.
- The play for me is to lean bullish for the week until Thursday. So we need to stick to levels and unless some unforeseen landmine comes out and wrecks our support levels.
- We are still following the March 18th to 28th trend. With CPI data coming on Friday, I expect that to be the end of this rally. However, until then, I am not seeing any sort of major landmines this week.
Levels I am Watching (same as yesterday)
Mentions: SPY
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
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.
Market Update: April 12, 2022 - SPY to 433 after relief rally; AFRM, CTRA, LAC on watch
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)
Market Update: March 30, 2022 - Strong SPY Close to End Quarter?
From Wednesday's update:
“SPY - I am looking at puts on Wednesday. We’re at an interesting cross roads here. There’s CPE data on Thursday morning, which also happens to be March 31, the end of the quarter. There could be a coutner-balance of selling the CPE data and funds painting the tape.
If SPY doesn’t crack on Thursday, I think it pulls back a lot on Friday at the latest. I’ll have puts for sure on Thursday afternoon if it runs into the close.
SPY chart is very overbought in 30m and approaching that zone on the daily - it’s going to pullback, I don’t care how optimistic retail is right now. See above for the charts.”
What Happened Today (Wednesday)
- $SPY was indeed a slow slide all day from 461 to 456 - right up until 3:30pm EST - then it clawed back almost 3 points in 30 min to close at 458.70. I did OK, should have done better since it was on my bingo card.
- AAPL - that green streak ended…finally.
- $LAC - I caught it at 34, sold at 35 - I had no reason, just put in a limit order. It ran to almost 39! one we’ve been talking about here for weeks. it went heavily into overbought zone, but this one is normally pretty quick to pullback and resume. keep an eye out for just that.
- $SOL ran to 125 on me. Sold yesterday at 113. Damnit. It’s my favorite crypto for sure.
- Russia/Ukraine - I didn't see any major changes here, except some US skepticism (correct, IMO)
- $MOS - I exited with a small loss today, really just to de-risk and let it work out those technicals a bit more. The Ukraine/Russia situation is a gamble either way on narrative right now (I don’t think Putin is actually pulling out). I’m going to let it play out, then ride the wave. No reason in being silly with options in this market. I’ll push the date out as well. 4/14 right around corner now.
Looking Ahead (Thursday)
- As is typical for Thursdays - this is the day. Core PCE data comes out at 8:30am EST. If anything is going to move the market this week, it’s this. I have no open positions, so I’m just going to see how it plays out. Most likely? It’ll just be ignored and off we go. 🤷
- We either got a preview of the pullback today - or it started today. We’ll see tomorrow.
- I’ve got no specific stocks on my watchlist for Thursday right now. They've all gone nuts at this point and need to cool off.
- I’m looking at SPY calls after 12pm EST if the market starts turning up going into the close - I’m expecting a strong close for end of month & quarter - huge capital inflows to the market.
- Then I’ll be looking to swap them out for SPY puts right at the close if we get a strong green close - I’ll be expecting a pullback on Friday / Monday that’s due.
- Several "if" caveats….
Market Update: March 29, 2022
What Happened Today (Tuesday)
- SPY closed +5.64 today, QQQ +6.28
- TRADE: $SPY puts @ open for a tidy profit, SPY calls in afternoon for a few bucks.
- AFRM - damn, I really blew this one. It was in weekend charts as prime play, I stared at it Monday, then I stared at it Tuesday. It put on another +11% today. Bravo!
- AMD roared +3 today, I didn’t trade it. Powder keg lid came off as expected last few days. Well done, AMD.
- AAPL just won’t stop. I stand in admiration. We’re only about 6 points from an all time high here…
- Russia/Ukraine unexpectedly (to me) reported progress that Russia would “significantly reduce” troops in Kyiv. This excited the market quite a lot - and while I hope it’s true - I’m not buying it right now. They’re still firing there…
- This caused my $MOS trade to get absolutely wrecked at the open (-55%). I didn’t close it or average down because I had plenty (unfortunately), but MOS came back very strong to close at 64.45 after dipping all the way to 59. I’m flat around 67.75.
- More Fed hawks were out giving warnings today about May. Even Bullard showed up off the top rope today.
Looking Ahead (Wednesday)
- Ukraine/Russia will hold more talks on Wednesday in Turkey. I’ve no idea what to expect here, but I think we’ll get some clarification in the negative direction as far as troops. I really don’t think it was what everybody thought it was. I expect to see some positive notes, but to hear that the troops were repositioned to new areas, not sent home.
- If that happens, commodities (and MOS) will resume their run that was interrupted today.
- ADP unemployment report on Wednesday at 8:15am, but I don’t know what this is worth anymore
- More Fed Presidents at 9;15am and 1pm
- SPY - I am looking at puts on Wednesday. We’re at an interesting cross roads here. There’s CPE data on Thursday morning, which also happens to be March 31, the end of the quarter. There could be a counter-balance of selling the CPE data and funds painting the tape.
- If SPY doesn’t crack on Thursday, I think it pulls back a lot on Friday at the latest. I’ll have puts for sure on Thursday afternoon if it runs into the close and the overbought conditions remain.
- SPY chart is very overbought on 30m and approaching that zone on the daily - it’s going to pullback, I don’t care how optimistic retail is right now. See above for the charts.
Market Update: March 28, 2022
What Happened Today (Monday)
- SPY closed at 456, up a little over 3 points for the day. It’s truly a work of art. 👌
- As I noted on Friday, the 20MA is curling up - https://stonks.chat/group/7/posts/290 - very bullish indicator.
- The weekend update noted that 458 is our next stop and that looks on the agenda for Tuesday stonks.chat/group/7/posts/296
- Trade: flipped AMD for a decent profit. Unfortunately I bought it right before the 4 point drop on the SPY, so had to average down. Worked out OK in the end, but AMD wasn’t quite moving at the pace of the SPY. Something is still sitting on it. See $AMD for trades.
- Trade: SPY 450c I traded a few times. This worked out as well, as you can imagine. See $SPY for trades.
- I did not buy it, but AFRM is showing strength and I like it here. It was from weekend charting. https://stonks.chat/group/7/posts/295
- Trade: I can’t help myself with MOS. It dipped $5, so I went in after it started turning up. See $MOS for trades.
- Russian involved in peace keeping talks may have been poisoned https://www.foxnews.com/world/russian-oligarch-roman-abramovich-ukraine-peacekeepers-suspected-poisoning
- China has started locking down millions of people in its zero tolerance policy, but I don’t think this will last long. They do not want to go into an economic stalemate again.
- No progress in Russia/Ukraine event.
Looking Ahead (Tuesday)
- Consumer Confidence Index will be released at 10am EST. This is a measure of how optimistic or pessimistic consumers are about their financial situation. Unless it’s a shocker (doubtful), won’t move market.
- Fed Harper speaks at 10:45am
- AFRM - on watch for entry. I should have went in today.
- AMD - my flavor of the week. I’ll trade it up until SPY 458.
- AKAM - another one from charts over weekend, slow ticking up https://stonks.chat/group/7/posts/295
- PAY ATTENTION: I’ve been warning about the market ignoring rate hikes, what could happen in May, and bond market - the bond market is yelling at us and at some point, the stock market will listen. https://www.cnbc.com/2022/03/28/bond-market-is-flashing-a-warning-sign-that-a-recession-may-be-coming.html
- 10Y Treasury is at 2.5% now….it was 1.5% on Jan 1. 🚨
- Chart - SPY - it’s just chugging as expected so far. I think we’ll see 458 on Tuesday and then run into some headwinds. If it pulls back, it might be a significant one - but I don’t really see anything significant enough to pull it back until Thursday’s PCE data. More likely to hit 458 and cruise until then.
Market Update: March 2, 2022
- ADP report premarket revised the January report that caused so much confusion from -300k to +500k. Say what? Then showed +475k for Feb. So, was the BLS report right, after all? I don't know what to believe with these jobs reports anymore - and the market is caring less, as well.
- I was also caught off guard by JPow. He had his testimony before the House today - and he all but said he'll be doing a 0.25% rate hike. The market liked that, especially since many were expecting 0.50% hike.
- Ukraine: We got some hope that a ceasefire is on the table.
- Trade: I closed out my overnight $MOS calls at 4.75 (from 4.45)
- Trade: I closed out my $SPY calls at 14.50 (from 13.48) - sadly these went on to 17.50. Grr!
- Trade: I did some more research on $MOS and decided it was worth a swing trade (hold for a few days) and added back the March 18 50c and some April 14 50c - see $MOS for those trades. Remember, this is the fertilizer play (on tightening supply due to world events)
- Trade: I also (poorly) traded AMD. It was an obvious one this morning just screaming at me, I took the quick scalp, but should have held it way longer. It roared most of the day. This is my favorite tech company to trade.
- We ended up +8 points today on the SPY and closed just over the 250MA - nice rally, mostly on the back of JPow's comments this morning.
Looking Ahead (Thursday)
- I don't see any economic data on the calendar that matters in premarket. We've got JPow again at 10am, but this time in front of Senate. I am guessing he's just going to mostly repeat himself? The only landmine I can think of is if they push him on the balance sheet.
- Trade: I might pick up some more $MOS if it continues to inch up. Liking this one. They're the largest in this space in the US, have plenty of cash, pay a dividend, and announced accelerated buyback - and are now in a spot where their product has tight supply.
- Trade: I'll have my eye on $AMD again. If the general market is moving higher, this should outpace it to the upside.
- Chart: 30 minute chart approaching overbought on the RSI only. MACD looks fine. Daily chart says we could keep moving up, pending any extreme news or balance sheet landmines from Senate.
SPDR S&P 500 - SPY
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