Weekly Market Preview - January 9th, 2023
Last Week Recap -
SPY had a weekly range of 377 to 388. Friday alone moved from 379 to 388 on the back of the Jobs data and Services PMI data. It was a very intriguing week and it appears the bulls are starting to find a narrative that is sticking. We are back on the bandwagon that the Fed will pause on rates soon. The jobs data came in hotter than expected, and unemployment went down. However, the wage rate went down so that helps avoid a wage price spiral.
The services PMI came in weak and the market took that as a signal that the Fed is doing its job in slowing the economy. It really seemed that the market was ready to go up and was just spinning any narrative they could to make it happen. The weakened economic numbers signals a possible soft landing if jobs stay strong, but it also gets us closer to a recession. Should be an interesting week ahead.
The services PMI came in weak and the market took that as a signal that the Fed is doing its job in slowing the economy. It really seemed that the market was ready to go up and was just spinning any narrative they could to make it happen. The weakened economic numbers signals a possible soft landing if jobs stay strong, but it also gets us closer to a recession. Should be an interesting week ahead.
Economic Data this Week (all times are EST)? -
- Check the full calendar here: stonks.chat/feed/catalysts
- Monday - Nothing Major
- Tuesday - Jerome Powell Speech at 9:00am ⚠️
- Wednesday - Nothing Major
- Thursday - CPI Inflation Report at 8:30am ⚠️
- Friday - UoM Consumer reports at 10am
So this week has a few major landmines with JPow talking in premarket on Tuesday and CPI data coming in on Thursday.
My Prediction -
I do think we see some de-risking on Monday heading into that JPow speech on Tuesday. I am not sure what to expect with it, since this is a speech in Europe. He normally is not as hawkish in these speeches, so the market may not really have a negative reaction to it.
The CPI data on Thursday is expected to show a cool report and that would give us three consecutive months of cooler inflation reports. The rate is still way above the 2% target the Fed wants, but the bulls will spin this as a downward trend that is showing that the Fed has done enough.
I expect the market to pullback to 383-386 at some point and then move higher on that CPI report. A 400 test is possible with the right data. However, if that CPI report comes in hotter than expected, the market will head back below 380 in a hurry.
Yet another week to keep it light and let the major reports dictate the trend.
The CPI data on Thursday is expected to show a cool report and that would give us three consecutive months of cooler inflation reports. The rate is still way above the 2% target the Fed wants, but the bulls will spin this as a downward trend that is showing that the Fed has done enough.
I expect the market to pullback to 383-386 at some point and then move higher on that CPI report. A 400 test is possible with the right data. However, if that CPI report comes in hotter than expected, the market will head back below 380 in a hurry.
Yet another week to keep it light and let the major reports dictate the trend.
Current Positions and Plays -
- I closed out my core puts for Feb 28 for a nice profit and grabbed some Mar 30th puts on Friday. I am slightly down on them due to Friday's continued move up after I grabbed them.
- I am looking at scalping most of the week. If an opportunity presents itself to close out the core puts for a gain, I will lock that in.
SPY Technicals -
- SPY Technicals - The 30 min and 1 hour are overbought. 4 hour and Daily charts are all neutral.
- SPY is under its 50 and 200 MA averages on the Daily chart. It just went above the 100MA.
- 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 rejects. Then I am looking for a possible break to show support if the CPI data allows it.
- 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% (479 HIGH)
- QQQ is approximately -35% (408 HIGH)
- DJX is approximately -10% (369 HIGH)
- IWM is approximately -30% (244 HIGH)
Levels I am Watching
- $SPY - levels 380 (major) > 383 > 386 > 390 (major) > 393 > 395 > 400
- 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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