Weekly Market Preview - January 16th, 2023
Last Week Recap -
SPY had a weekly range of 386 to 399, closing near the highs of the week. The CPI report came in at expectations and the market held all of its gains that it frontloaded heading into the report.
The bulls have a nice narrative building here with inflation coming down, unemployment staying low, Fed slowing rate hikes, and consumer still somewhat strong. This is creating the goldilocks or soft landing narrative that is not too far fetch. The bulls of course take this theory one step further by saying all this means the Fed will pause or cut rates in a few months.
The bears argument is centered around a possible recession and notion that the Fed is not looking at cutting rate hikes anytime soon. If the market is strong, unemployment is low, inflation is falling, then why would the Fed pause here? IF anything they can keep pounding QT and lower the balance sheet without much fear of the market stumbling.
So, here we sit near the bear market line of rejection and the 200 Daily moving Average. Do we reject here, or breakthrough? There is an interesting battle happening here.
The bulls have a nice narrative building here with inflation coming down, unemployment staying low, Fed slowing rate hikes, and consumer still somewhat strong. This is creating the goldilocks or soft landing narrative that is not too far fetch. The bulls of course take this theory one step further by saying all this means the Fed will pause or cut rates in a few months.
The bears argument is centered around a possible recession and notion that the Fed is not looking at cutting rate hikes anytime soon. If the market is strong, unemployment is low, inflation is falling, then why would the Fed pause here? IF anything they can keep pounding QT and lower the balance sheet without much fear of the market stumbling.
So, here we sit near the bear market line of rejection and the 200 Daily moving Average. Do we reject here, or breakthrough? There is an interesting battle happening here.
Economic Data this Week (all times are EST)? -
- A lot of Fed Speakers this week. Check the full calendar here: stonks.chat/feed/catalysts
- Monday - Holiday
- Tuesday - GS and MS earnings in premarket
- Tuesday -NY Manufacturing Index at 8:30
- Tuesday - Williams Speech at 3pm
- Wednesday - UK/EU Inflation Reports at 2am
- Wednesday - US PPI at 8:30am
- Wednesday - Retail Sales at 8:30am
- Thursday - LaGarde Speech at 5:30am
- Thursday - Housing Data at 8:30am
- Thursday - NFLX earnings afterhours
- Friday - Nothing major
My Prediction -
I am going to keep this short and simple. I believe we see a pullback to 393 at some point early this week, possibly 390. Bears will feel emboldened as that would be a rejection at the bear market trendline, and then we start to reverse course heading into the major tech earnings next week. I imagine a lot of Fed officials will maintain the hawkish rhetoric, but it will have little impact as the bulls know that 25 BPS hike for February is heavily favored to happen.
Ultimately, I think the rally after the pullback could get as high as 430. There is a lot of bullish sentiment out there, and I don't see anything slowing that down.
Yet another week to keep it light and let the major reports dictate the trend.
Ultimately, I think the rally after the pullback could get as high as 430. There is a lot of bullish sentiment out there, and I don't see anything slowing that down.
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 early in the week for a nice gain. I did do a strangle on CPI and got walloped on it. I ended up scalping my way back green for the week.
- I am sticking with daily scalps for the time being.
SPY Technicals -
- SPY Technicals - The 30 min, 1 hour and 4 hour are close to overbought. Daily chart is neutral.
- SPY is under its 50 MA but it is over the 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 it turns into support. 407 is the next Fib line higher.
- 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 comfortable buying at.
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 have turned back into a daytrader. I love playing ES futures.
- This is not financial advice
SPDR S&P 500 - SPY
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