Weekly Market Preview - January 3rd, 2023
Last Week Recap -
It was a very entertaining week with the market testing under 380 a few times. Ultimately, we closed the year above 380 and that level has held up as support. It was a low volume holiday week so I am not sure we can put too much weight in any of the price action. There was not any additional economic data to change any of the bearish macro outlooks.
The first week of the year brings back the data, fed speakers and the volume. The economic calendar is jammed packed this week with important data so lets take a deep dive into it.
Economic Data this Week (all times are EST)? -
- Check the full calendar here: stonks.chat/feed/catalysts
- Monday - Markets Closed
- Tuesday - US PMI data at 9:45am
- Wednesday - JOLTS data at 10am
- Wednesday - FOMC Minutes at 2pm
- Thursday - ADP Employment Report at 8:15am
- Thursday - Services PMI at 9:45am
- Friday - EU Inflation report at 5am
- Friday - US Nonfarm Payroll data at 8:30am ⚠️ (main data for the week)
So this week is all about jobs jobs jobs. There are a few scenarios we need to keep an eye out for on how the market reacts to each of the jobs reports. Here are the scenarios I am looking out for on the big Friday's report:
- Nonfarm Payrolls (Prev Month 263k) & Unemployment is 3.7%
- If payrolls, employment number, or hourly wages comes in higher/hot vs the expectations, that would continue to show a tight labor market. The bearish argument here is that the Fed will want to keep this number down and thus will stay aggressive for longer. The bullish argument here is that the labor market is still strong and could be due to a strong consumer, thus limits the recession argument and adds credence to the soft landing argument.
- If all the data comes in under expectations, that will bring the soft landing argument a lot of weight in the short term and it could spark a bear market rally.
My Prediction -
We won't have the full picture on the jobs data until that Friday report, so until then I am not putting much weight in the price action. Friday's premarket data does setup a great straddle opportunity and I will prepare to make that play. My gut says we are heading lower regardless of the data due to the inability of one set of reports to fully change the Fed's aggressive approach. Can we test 390 again? Sure, but I am not sure what allows that to stick without any sort of momentum in a believable bullish narrative.
Current Positions and Plays -
- I am holding core ES puts for Feb 28. I have about 80% of my position and will probably sit back on adding anymore unless we test 390 again.
- I will be looking at entering a strangle on Friday in premarket for the Nonfarm Payrolls Jobs Data.
SPY Technicals -
- SPY Technicals - The 30 min, 1 hour, 4 hour, and Daily charts are all neutral.
- SPY is now under its 50, 100 and 200 MA averages on the Daily chart.
- SPY Fibs for ATH to June 2022 low - 390 is the .236 line. There is a possibility for us to retest this line soon and most likely it turns into resistance.
- SPY Fibs for COVID low to ATH - 380 is the .382. If this level falls on the weekly close, it could lead to a major push downward. This seems to be the level that the market is hanging around.
Percentages from the Highs
- SPY is approximately -20%
- QQQ is approximately -35%
- DJI is approximately -10%
- IWM is approximately -30%
Levels I am Watching
- $SPY - levels 373 > 376 > 380 (major) > 383 > 386 > 390 (major) > 393
- 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.
- This is not financial advice
SPDR S&P 500 - SPY
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