Stock Market Week Ahead: January 3, 2023 - SPY 380/390 range this week; economic data resumes; stay nimble, but bearish.
Economic Calendar: https://stonks.chat/feed/catalysts (all times EST below)
- Monday: US Markets are closed.
- Tuesday: US Manufacturing PMI @ 0945
- Wednesday: US ISM PMI and JOLTS (!!) at 1000
- Thursday: ADP Payroll @ 0815, Jobless Claims @ 0830, Services PMI @ 0945
- Friday: US Non-Farm Payrolls @ 0830 (this is event of the week), ISM Services PMI @ 1000
Thoughts - General:
- Last week: My range prediction winning streak ended. I was totally wrong on last week’s range - if you can believe it - I was too bullish! I guessed 380-393, but it was 376 to 384. No problem, I was holding puts. I had a surprising lucky streak on timing and managed to close out near the bottom and re-buy at the highs on puts. So I’m strutting into 2023 with half the position I had at nearly high of the week SPY avg.
- As we kick off 2023, I repeat what I’ve said for the last few weeks: There is no data-based bull case - we’re staring down a recession, bad earnings, rising unemployment, no QE (QT, actually).
- The only hope bulls have is for something major/critical to break (which would cause a huge dip anyways) - that would cause JPow to cut rates. Until that point, he’s not backing down/pivoting until end of 2023 at earliest. He will hold the rate once he’s got it to at least 5.25% until then. He’s going to beat inflation even if he goes too far (which I agree with).
- I read an article last week that said “Bull’s Biggest Fear in 2023: That there is NOT a recession” - that’s a spot on headline. It’ll be a long year of pain if they don’t get a full blown recession and make some dials spin.
- It may just play out that way until the crash finally happens once something major can’t take any more slow, long-burning pain.
- I may be looking a little too early in the year for SPY 330 though (April 2023 currently). It may take longer to get and stay under that, just based off of how strong consumer spending is staying and how little unemployment is moving…..for now.
- It doesn’t change my position, just timing. I don’t expect this to move straight down. It will stumble down the stairs. There will be plenty of bear market rallies (based on technicals) all the way to the bottom (wherever that is) and I’ll play as many as I can spot.
- For me - those are the main things that matter - consumer spending & unemployment numbers. Those will lead any earnings whiffs.
- Does AAPL issue a warning about Q4? The CFO did give a hint… Does TSLA show weak delivery numbers? It’s all going to happen in the next 2-3 weeks, if so.
- VIX is still asleep - but I’m looking for it to light up hard in January.
- As for this week - I’ll be looking for some capital inflows/new year equity buying to push the markets up. This is why I only have half my position. I want the other half this week from as high as 390 if they’ll push it there.
- We’ve got a normal schedule of data in the next two weeks - most importantly Payrolls (and wage growth) data on Friday - then CPI next week (it will still matter a little - just a lot less than it did). JOLTS on Wednesday will make it move, too. Keep an eye on the calendar above.
Thoughts - Technicals (Latest):
- SPY levels: 370, 375, 380, 390
- 200 MA: 399.92
- Chart - Weekly: Neutral/Bearish - The lines are too tangled and RSI in dead middle, but this looks like a consolidation before a drop.
- Chart - Daily: Bullish - support a move up for first 2 days of year.
- Chart - 4h: Bullish - same.
Trading Plan (This Week):
- Current position: I’m holding half position I want on /ES puts for March 2023.
- If we get to 390 SPY, I’ll add more.
- Then I’m just waiting for a shoe to drop.
- I’ll play any key level bounces or obvious momentum with calls I exit by EOD. Not holding calls overnight at any point.
SPY weekly in all its glory
SPDR S&P 500 - SPY
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