Weekly Market Preview - January 23rd, 2023
Last Week Recap -
SPY had a weekly range of 387 to 400, closing near 396. The market absorbed the poor retail numbers and had a nice pullback from 400 to 388 on Wednesday to Thursday. It then had a monster rally on Friday to close near 396 on Monthly options expiration. Netflix had ok earnings and pretty good subscriber growth numbers. So how much of the rally was options magic or how much of the rally was actually merited? Time will tell this week.
The bulls still have a nice narrative building here with inflation coming down, unemployment staying low, and Fed slowing rate hikes. But the retail data from last week did show that the consumer is slowing their spending. That is a key element to the soft landing narrative. There is a lot of front loading happening here by the bulls, but it may spark a continued move for weeks to come.
The bears recession argument got some more support with the poor December retail sales as well as all the Fed Speakers still signaling that no rate hike cut was imminent.
I will keep adding this point in all my previews: 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 again for the second week in a row near the bear market line of rejection and the 200 Daily moving Average. Do we reject here, or breakthrough?
The bulls still have a nice narrative building here with inflation coming down, unemployment staying low, and Fed slowing rate hikes. But the retail data from last week did show that the consumer is slowing their spending. That is a key element to the soft landing narrative. There is a lot of front loading happening here by the bulls, but it may spark a continued move for weeks to come.
The bears recession argument got some more support with the poor December retail sales as well as all the Fed Speakers still signaling that no rate hike cut was imminent.
I will keep adding this point in all my previews: 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 again for the second week in a row near the bear market line of rejection and the 200 Daily moving Average. Do we reject here, or breakthrough?
Economic Data this Week (all times are EST)? -
- Check the full calendar here: stonks.chat/feed/catalysts
- Blackout Period for the Fed until FOMC on Feb 1st.
- Monday - EU LaGarde Speech at 12:45PM (DXY implications)
- Tuesday - US PMI at 9:45am
- Tuesday - MSFT Earnings in Afterhours
- Wednesday - No Major Economic Data
- Wednesday - BA and T Earnings in Premarket
- Wednesday - TSLA Earnings in Afterhours
- Thursday - AAL, LUV, and MC in premarket
- Thursday - INTC and V earnings in after-hours
- Thursday - US GDP at 8:30am
- Friday - PCE Data at 8:30am
- Friday - UoM Consumer at 10am
My Prediction -
This is going to sound like a repeat from last week, but I honestly think we have the same setup. Wait for a pullback and then enter long for a rally. Microsoft earnings are the main event this week, so that can be the cause of the pullback, or the resumption of the uptrend based on the results. I do not think there is much of a market wide bearish case for TSLA’s earnings. The name has been beaten up so badly already, that there is not much more for bears to take from the earnings imo.
The GDP and PCE data at the end of the week are minor and should not cause much of a market reaction. I am a bear at heart, but this is looking like more bullish momentum heading into FOMC next week as long as MSFT’s earnings are not abysmal. I still have a rally target for 430 for this run. It may take a few weeks/months.
Though I am long term bearish, short term bullish, I will not be swinging any core positions. I am having a lot of success scalping the directions each day, so I am going to stick with that.
The GDP and PCE data at the end of the week are minor and should not cause much of a market reaction. I am a bear at heart, but this is looking like more bullish momentum heading into FOMC next week as long as MSFT’s earnings are not abysmal. I still have a rally target for 430 for this run. It may take a few weeks/months.
Though I am long term bearish, short term bullish, I will not be swinging any core positions. I am having a lot of success scalping the directions each day, so I am going to stick with that.
Current Positions and Plays -
- I scalped all week long and played the pullback nicely. My goal is to net 20 ES points a day in scalps, and I was able to do that for the week.
- I am sticking with daily scalps for the time being.
SPY Technicals -
- SPY Technicals - The 30 min is close to overbought. 1 hour, 4 hour, and Daily charts are a little higher than neutral.
- SPY is right at its 200 MA average and near the bear market trendline on the Daily chart.
- SPY Fibs for ATH to June 2022 low - 390 is the .236 line. We tested this line and it ultimately held as support. I do not see us testing 390 again until the conclusion of this bear market rally. 407 is the next Fib line higher.
- SPY Fibs for COVID low to ATH - 380 is the .382. The next level is 418.
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 390 (major) > 393 > 396 > 398 > 400 > 403 > 410 (major)
- 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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