Stock Market Week Ahead: October 3, 2022 - SPY 350/370 range this week; mixed signals; capitulation or spark for bulls?
Economic Calendar: https://stonks.chat/feed/catalysts
- Fed Officials all week - check calendar for them all.
- Monday: Nothing major.
- Tuesday: JOLTS (jobs-related) at 10am EST; ECB Lagarde @ 11am EST
- Wednesday: Not much.
- Thursday: Jobless claims @ 830am
- Friday: Non-farm payrolls & unemployment rate @ 8:30am EST ⚠️ Event of Week
Thoughts - General:
- I had a good week last week, ended September nicely. I didn’t get to post updates later in the week, but the bearish trend worked out. I didn’t hold as long as I should have - per usual, but I can’t complain.
- Event of the week is the non-form payrolls on Friday. It’s premarket, so have yourself setup prior. If we’re not there yet, we’re right on the edge of seeing jobs start to break down. Rate hikes have been fierce, but impact isn’t instant. We continue to see tech companies slowing or stopping hiring.
- The bulls need jobs to break down to get the Fed to ease up; the bears need jobs to stay strong for Fed to keep bringing the heat.
- Core PCE came in hotter than expected on Friday. 🌶
- Oil is rallying on OPEC cuts. This is a tough one because oil rally is bad for inflation, but the reason they are giving is reduced demand due to impending (or in progress) global recession. It’s a vicious circle right now, but it will straighten out at some point.
- Fed Presidents will be out with the same spiel: “We can’t stop hiking rates prematurely, must remain vigilant until inflation monster is tamed.”
- I am not sure why they’re even bothering. We know….we know…..
- Except for the Weekly chart, the intervals I follow - Daily and 4h are quite oversold. We’re close to a breaking point (capitulation) that if we don’t get a bounce - a real one - we’re going to break down real hard. I’m on the fence as to which is going to happen now (I expect it before EOY/upcoming earnings), but we’re at a point where it could happen.
- I’m having a hard time with this market because while I’m very bearish (as I have been most of this year), the move down has been faster than I expected and technicals say one thing, but fundamentals say another. I know to just buy puts way out and pack it up for winter, but that is easier said than done as a trader-cowboy staring at oversold conditions.
- I think the DXY is going to chill out this week. I don't think TNX will.
Thoughts - Technical:
- SPY levels: 350, 355, 358, 363, 373
- Chart - Weekly: Bearish - just carrying with the move down. We saw this a couple weeks ago and it’s just doing its thing. Not oversold.
- Chart - Daily: Neutral - oversold - but could keep going, easily. Fundamentals trump TA….
- Chart - 4h: Bullish - oversold just barely - this one surprised me. This one likes to dig in on the RSI and it has plenty of room to go. Another 8 points easily if there’s no bull spark.
Trading Plan (Monday):
- I’ve got no position. I missed the final breakdown on Friday and it just felt like too much (for now), so I put myself on the bench.
- I’ll be looking for a fade the rip opportunity at 360/363 using November puts.
- I won’t consider calls to even trade until Tuesday or Friday (both are jobs-related data days).
4h (biggest surprise)
Stock Market Week Ahead: September 26, 2022 - SPY 355/373 range this week; oversold technicals; fade the rips.
Economic Calendar: https://stonks.chat/feed/catalysts
- There are so many US Fed officials speaking this week, I won’t mention each one, just know they’re all week at all times. Click above to see them all.
- Monday: ECB - Lagarde @ 9am EST. BOE Tenreyro @ 12pm EST
- Tuesday: ECB - Lagarde again @ 7:30am EST, Durable Goods @ 0830; New Home Sales @ 10am
- Wednesday: More Home Sales data @ 10am EST
- Thursday: Jobless claims @ 830am; GDP as well.
- Friday: PCE @ 8:30am; Mich Consumer Sentiment @ 10am - I think day this is most important of week?
Thoughts - General:
- What a wild ride the last two weeks have been. It was fun and profitable, but the volatility and big moves are going to taper down.
- I don’t see any 10+ moves coming up for a while, so manage expectations and embrace the chop.
- The move is longer-term (more than a couple weeks, let’s be clear) swings, NOT intraday trading.
- This week is full of US Fed officials talking. What are they going to say that JPow didn’t already say?
- They are split on the Dot Plot, so maybe you’ll see them pitching their view on that. I don’t see any of them being market movers, for the most part, unless one of them comes in from the top rope with some crazy talk.
- The bulls will be looking for any hope at all, but I think it will get faded quick. There’s no reason to buy long-term right now. However, technicals are either oversold are getting oversold - so there will be consolidation or a bounce in very short-term.
- Overall, I think we’re looking at a slow bleed for next couple months, with pops of hope along the way. Until AAPL falls - then we’re going down hard to fresh new lows.
- Homes data should confirm what JPow said - cooling in progress. Thursday may say a pop if the Jobless claims indicate rising unemployment - but unlikely this week.
- DXY is going to dance a bit this week. It’s already moving big on Sunday night and with ECB dragging their ass, it’ll continue to trend up. Once the other central banks start catching up, DXY will settle down.
- We’re walking into earnings season. If AAPL shows any cracks…..
- Which, again, I think puts us into a slow bleed with con
Thoughts - Technical:
- SPY levels: 355, 363, 373, 380, 390
- Chart - Weekly: Bearish - just carrying with the move down. It’s going to 350 at some point, at least.
- Chart - Daily: Neutral - oversold just slightly, bounce coming.
- Chart - 4h: Bullish - oversold and turned up already. Relief rally coming, but no thank you.
Trading Plan (Monday):
- I’ve got 1 SPX 3650p 10/31 that I held over weekend. May sell it, may keep it. I don’t think I’ll be adding to it.
- I don’t think there’s much meat on this bone to go down in the next few days - outside of additional bad news internationally - which is certainly possible.
- There’s more opportunity to the upside off these technicals - but not long-term. If you play the upside, take it quickly and don’t go big.
- I’ll be looking to fade any rips to any of the levels I noted above, though I’m in no hurry.
Stock Market Day Ahead - September 21, 2022 - SPY - 373/393; big range; big day; JPow in the house. 🥳
What Happened Today (Tuesday)
- SPY traded 381 to 386
- I held that SPYc overnight and it got me. It went against my plan and I paid for it. Well deserved.
- I also missed that Lagarde would be speaking - needed to adjust my Economic Calendar settings to allow EUR & UK. That and Putin both caused drops today. Top rope….
- At the end of the day around 385, I started building back my long-term puts position again. I think it’s fine to do so regardless of what JPow says. Any rally will be short-lived when reality hits. I picked up just 1 SPXp for Oct 31. 🎃
- Ford warned about its supply chain. There will be more warnings ahead.
Technicals (Latest)
- SPY levels: 373, 380, 390, 396, 400, 405, 410
- Chart - Weekly: Bearish - It’s curling down now, so it should continue generally down on a weekly interval for a while.
- Chart - Daily: Neutral - needs a fundamental kick for any big move either way.
- Chart - 4h: Bullish - but it’s useless for tomorrow. Fundamental event.
Looking Ahead (Wednesday)
- FOMC is Wednesday at 2pm EST. See my Week Ahead for my thoughts on that. https://stonks.chat/group/7/posts/671
- I am equally torn between this being a positive event and a negative event. Everybody I’m reading feels the same way.
- I’m going to keep it simple and just do a small options strangle. I can pontificate all day on what it’s going to do, but why bother. I know it’s going to move big Wed and probably Thursday, so I’m going to do a strangle with 1DTE (vs 0DTE) and let it rip.
- Check the Weekly Chart below for why i’m building long-term position.
SPY | SPX Trading Plans (Wednesday)
- I’ll add 1 more SPX to my long-term puts position at the open (assuming 384) and then again at 380, 390, 400.
- By 1pm, I’ll set up an options strangle $2 OTM on both sides w/Thursday dates.
Stock Market Day Ahead - September 20, 2022 - SPY - 386/393 range; chop & small upward trend to Wednesday.
What Happened Today (Monday)
- SPY traded 382 - 388.50
- I had a SPXp over the weekend. I couldn’t explain the drop from 387 on Friday to 382 on Monday, so I locked in the profit. I got cheeky and put in a trailing stop. That worked against me because the open spiked so fast, it skipped right over my 2-point trailing stop. It was a $400 order type mistake. I should have just hit it with a market order.
- I sat on my hands all day, then started chewing my arm off to buy a call at 386/387, kept resisting until the close and almost high of day for a SPXc.
- I was resisting because it wasn’t in my outlook for the day - quite the opposite, actually - so I was trying to avoid. Oh well.
- Crypto got whipped on Sunday night at 10pm EST - don’t know why.
- I saw some minor news across the globe, but nothing that explained crypto + 5 point SPY drop.
Technicals (Latest)
- SPY levels: 373, 380, 390, 396, 400, 405, 410
- Chart - Weekly: Bearish - It’s curling down now, so it should continue generally down on a weekly interval for a while.
- Chart - Daily: Neutral - needs a fundamental kick for any big move either way.
- Chart - 4h: Bullish - this one turned a little bullish on Friday - continued on Monday - and looks good for Tuesday. I wouldn’t use this chart heading into Wednesday, though. Depend on the Weekly.
Looking Ahead (Tuesday)
- Reminder: FOMC is Wednesday at 2pm EST. See my Week Ahead for my thoughts on that. https://stonks.chat/group/7/posts/671
- I continue to expect Wednesday to be a positive event. I don’t think it will last long - until Thursday afternoon - but I do expect it to be green.
- I am guessing that’s what we’re seeing a little bit of right now. It came off 382 and got right back above where it was on Friday night (387) and is now sitting at 389 in futures. That’s a solid 7 point move off the bottom today.
- Since today went against what I expected (pop at open and slow bleed all day, all Tuesday, and flat Wednesday), I am wondering if we’re getting bullish optimism like CPI leading few days. I can see it and I think it’s probably right.
- On the flip side, I can see people running scared ahead of JPow - for good reason.
- I’ll probably exit these calls at the open if they’re profitable and then try to sit back and plot my Wednesday move. I’m expecting it to jump over 390 at the open, then go back and pay its respect, then we’ll see where it goes from there. If it respects 390, it will be chop all day.
SPY | SPX Trading Plans (Tuesday)
- If we’re over 390 at the open, I’ll exit this one SPXc that I have, purchased at the close around 388.50.
- I don’t see a trade if that happens, I think we’ll just gyrate around 390 all day, so there’s nothing to do.
- I will probably bench myself after that and just wait until an A+ setup for Wednesday shows up.
Stock Market Week Ahead: September 19, 2022 - SPY 380/400 range this week; FOMC rate hike Wednesday — 75 or 100bps?
Economic Calendar: https://stonks.chat/feed/catalysts
- Monday: Nothing.
- Tuesday: Nothing.
- Wednesday: FOMC rate hike @ 2pm; followed by JPow at 2:30pm ⚠️ - Event of the week
- Thursday: Jobless claims @ 830am, but won’t matter following Wednesday
- Friday: S&P PMI data all day from various countries with US @ 9:45am; JPow speaks at 2pm, but it looks like a non-event.
Thoughts - General:
- We’ve arrived. FOMC is on Wednesday at 2pm. Cue the bongos.
- I think this is Peak JPow Fear. He’s only going to go down from whatever he does on Wednesday.
- There’s a decent chance of a 100bps hike. People act like it’s never happened before. It’s happened both on the increase and decrease between modern and Volker (400bps in a month..): https://www.federalreserve.gov/monetarypolicy/openmarket.htm & https://www.thebalancemoney.com/fed-funds-rate-history-highs-lows-3306135#toc-fed-chair-paul-volcker-august-1979-august-1987
- You can’t use the excuse of ‘those were exceptional times’ - because that’s exactly what we have here. It’s going to get real exceptional if they don’t tame the inflation monster. America must continue to lead the charge.
- Now, based on what I know about current FOMC members and JPow, do I think they’ll hit it with 100bps? No.
- I think we’re looking at 75bps. It’s what the market expects and what I think JPow has projected out. That makes sense based on current data.
- This stuff is not immediate. We’re seeing results in certain places. Layoffs are starting, companies are warning, real estate boom is over, the pain has begun.
- I think we’re more likely to see 0.75 on Wednesday, then MAYBE another 0.75 if we haven’t seen results by next one (November 2) - but you’ve got another CPI + jobs data before then.
- If we come in at 75bps, we’re likely to see a positive market reaction, especially after his speech. It’ll show that Fed will do what’s necessary, he’ll mention some positive data has started trickling in (for his mandate at least), and show he’s not going any higher than 75bps going forward - only stepping it down. He’ll spin some magic like there’s going to be no recession.
- If we come in at 100bps, then we’re going to crater further and he’s going to be really tough in his speech. It will confirm a recession for everybody (which is coming anyways). I think this is unlikely scenario, but possible.
- I see another JPow speech on our calendar for 2pm on Friday - I don’t think it’s market moving - https://www.federalreserve.gov/conferences/fed-listens-transitioning-to-the-post-pandemic-economy.htm
- I wish there was more going on this week, but FOMC is it.
- Of note, that FedEx warning we had was not their official earnings. That was a ‘preliminary warning’ - which we’re going to see more of. I think it’s a way to communicate to JPow to ‘chill out’, frankly. They did this last week and their earnings date is Thursday - after FOMC.
- Week of September 26: Not much on the calendar, except oil data and PCE on Friday.
Thoughts - Technical:
- SPY levels: 373, 380, 390, 396, 400, 405, 410
- Chart - Weekly: Bearish - this turned back the other way on CPI. It’s curling down now, so it should continue generally down on a weekly interval for a while.
- Chart - Daily: Bearish - still plenty of room to go down. 380 or lower.
- Chart - 4h: Bullish - this one turned a little bullish on Friday - I don’t trust it though. I think it turns back down before Wednesday.
Trading Plan (Monday):
- I held one SPX 10/5 3860p over weekend for the hell of it. I like it though. I’m looking for a quick pop to 390 on Monday - then slow fade end of day, Tuesday, Wednesday morning.
- I’ll add a couple more SPXp at 390/396 OR 380 (confirmation) and then exit prior to JPow on Wednesday - I may let it ride up until that moment for max VIX. I’m staying out of the man’s way with any one-sided trades, though. Lessons learned there…
- I might do a strangle on Wednesday around lunch, but it would be small by comparison to the CPI one. I don’t feel strongly about a violent move in either direction right now. As noted above, I think the bulls have a good chance here to get a ‘whew, only 75bps’ rally post-JPow. If we trend down until this event, the technicals will be prime for it, too.
- BOE and Swiss Bank are releasing their rate hikes on Thursday - which should push the DXY down and the SPY up - it’s set up real nice for a run…
Two charts...
Don't lose sight of the long-term monthly:
Weekly
Stock Market Week Ahead: September 12, 2022 - SPY 390/420 possible range; CPI is event of the week; bullish technicals.
Economic Calendar: https://stonks.chat/feed/catalysts (we recently added this - it’s very good/comprehensive)
- Tuesday: CPI (August) @ 0830 ⚠️- this is market event of the week
- Wednesday: PPI @ 0830
- Thursday: Retail sales @ 0830; Jobless claims @ 0830; NY Manufacturing Index @ 0830
- Friday: Nothing.
Thoughts - General:
- We’ve got a trend setting week upon us. Tuesday we’ve got CPI data, which is event of the week/rest of month (more important than FOMC)
- CPI Headline will almost certainly cool (continuing ‘peak inflation’ narrative), however Core CPI is unlikely to come down and will likely push higher.
- That makes it a mixed report, but Core CPI is what Fed is looking at. It will just solidify the 75bps next week at FOMC.
- I think even if we saw cool/cool, we’d be looking at 75bps - because employment isn’t tame yet. The man was clear he needs several months of positive reports to change his position.
- Ukraine/Russia situation had a positive development (for Ukraine) with them gaining back some ground and showing signs of the war pushing back the other way
- I am long-term bearish, but I do think we’re going to see 420 before we see below 400 again — if the CPI report data comes in as I expect it to.
- REMINDER: FOMC is September 21.
Thoughts - Technical:
- SPY levels (no change from last week): 390, 396, 400, 405, 410, 416, 420
- Chart - Weekly: Bullish (this is the one I had backwards and cost me a lot) - it’s trending UP now.
- Chart - Daily: Bullish - we got the bounce we expected from last Sunday’s report. There’s more to go.
- Chart - 4h: Bullish - same as Daily - plenty more to go on the upside
Trading Plan (Monday):
- I am very bullish for this week - but there’s no reason to gamble against the CPI on Tuesday. I’ll be setting up a strangle.
- I think we’ll touch 410 at some point on Monday, so if there’s 2-3 points of upside (ie 417-418), I’ll play some quickie calls.
- I’ve got this damn puts position I entered way too early, but it’s out in November, so I’ll just keep watching it bleed for now.
- The real move for Monday is setting up a strangle ahead of Tuesday premarket CPI data. I’ll do that right at the close, regardless of price using a 1DTE pair.
Stock Market Week Ahead: September 6, 2022 - SPY 385/407 week range; short/low volume trading week; technical bounce coming. 📈
Economic Calendar: https://stonks.chat/feed/catalysts (we recently added this - it’s very good/comprehensive)
- Tuesday: Nothing.
- Wednesday: Brainard @ 12:35pm
- Thursday: Jobless claims @ 0830am; JPow @ 9:10am (don’t expect much here); ECB meeting (50/75bps hike)
- Friday: Nothing.
Thoughts - General:
- I’ve spent this evening looking at some charts. In particular, a 15 year, monthly chart (see previous post), and the one you’ll see at the bottom - Weekly.
- Both say the same thing - the trend is down and it has all the storms brewing to keep it that way for the next 6-9 months.
- On that basis, I’m going to change up my strategy a bit. I’m going to slowly build up a long-term SPX puts position and will try hard not to cut it loose. If I do, I’ll re-enter. I’ll be collecting up: SPX 3800p (10/31), 3750p (11/30), 3700p (12/30).
- We’ll call that my ‘core’ position, since that’s where I see the market going ‘long-term’
- I’ll carry on doing swings/trades off lines and events as normal with smaller size (by comparison).
- So, for this week? I think the bulls will have this week if they can round up some buyers. There’s really nothing on the agenda this week and will be low volume all week. The technicals (see below) are calling for a bounce very soon (early as Tuesday). Stick to the levels though. This won’t be a huge bounce without a surprise fundamental event.
- There are some wildcards out there: Oil & Russia; JPow on Thursday (likely nothing - but you never know with him); DXY (cracked 110 today…)
- The action is next week.
- REMINDER: CPI is next Wednesday - September 14.
- REMINDER: FOMC is September 21. It seems like a lock we’ll get another 0.75% now, unless a jobs report of the final CPI shock and awes.
Thoughts - Technical:
- SPY levels (no change from last week): 385, 390, 396, 400, 405, 410
- Chart - Weekly: Bearish - important crossing of the Ripster Clouds happened. New trend to the downside started early last week.
- Chart - Daily: Neutral - we’re getting close to a bottom on RSI - so bounce is coming up - probably over 400.
- Chart - 4h: Neutral/bullish - we’re a full week into oversold territory - but like I warned last SUnday - the 4h can do that. It’s not a quick bounce. However, we’re been oversold for a while now - so much like the Daily - it’s coming soon.
Trading Plan (Tuesday):
- I’ll be looking to nibble on long-term puts at 400+
- I held a Sept 12 SPX 3950 call over weekend for fun. Based on technicals above, it might be worth just holding it for 24-48 hours.
- The move is calls a week out, if there’s any move at all.
Most important chart to me:
Stock Market Week Ahead: August 29, 2022 - SPY 396/410 range this week; technicals reset; Fed Hawks all week
Economic Calendar: https://stonks.chat/feed/catalysts (we recently added this - it’s very good/comprehensive)
- Monday: Fed Brainard @ 2:15pm EST
- Tuesday: Fed Barkin @ 8am; JOLTS (jobs data) and consumer confidence @ 10am EST; Fed Williams @ 11am
- Wednesday: Fed Mester speaks - she’s a hawk - at 8am. Eurozone CPI premarket.
- Thursday: Not much - though anything jobs related will be increasingly important.
- Friday: Non-farm payrolls @ 8:30am (important, last one before FOMC September)
Thoughts - General:
- Friday recap: I made a critical error on Friday about 20 min before JPow spoke - I tinkered with my options strangle and biased it towards calls. That broke the entire point of a strangle and whatever you want to call the nonsense I had, it was a ~4.5x difference in profits. It was a way more wild day that I was expecting (I was thinking 5-7 point move in either direction) and was set up perfectly for it.
- Lessons: Trust the plan and research that you’ve put the time and effort into.. Execute the plan. Don’t tinker without a confirmed reason.
- Looking forward….
- Jobs data will be much more important going forward. so I’ll need to pay more attention to those reports..
- JPow wants to break the employment numbers before he eases up on the gas. He made that clear.
- If you haven’t watched the speech, you really need to. it’s less than 10 min 🍿 https://www.youtube.com/watch?v=zJ3sEeArWlw&ab_channel=CNBCTelevision
- This week, we’ve got Fed speakers all over the place. It will be little hawks flying around and warnings about ‘not yet seen peak inflation’
- Ukraine - this is more on edge with the shelling of the nuclear plant - keep an eye out here. I really hope they aren’t that stupid.
- DXY will continue to move up - 110 or higher - and bring SPY pain - until ECB/rest of world gets its rates up higher (they’re moving slow). ECB has CPI data this week which will encourage some big boy hikes.
- Samosa has a good theory that we’re returning to SPY 396 - where it was before JPow sent it on the ‘neutral’ comment. He thinks Friday blows out any reason for the run we had and it will return to where it came from - at least. I agree.
- At 396 (and probably 400), we’re going to catch a bid and get some support and possibly a bounce. Nothing goes straight down.
- REMINDER: FOMC is September 21. It seems like a lock we’ll get another 0.75% now, unless a jobs report of the final CPI shock and awes.
- NOTE: Next Monday is Labor Day, US markets are closed. Expect volume to come back strong after that with all the boys back in town from their summer slumber.
Thoughts - Technical:
- SPY levels (no change from last week): 396, 400, 405, 410
- Chart - Weekly: Bearish - important crossing of the Ripster Clouds should happen on Monday. This is big break in trend to the downside.
- Chart - Daily: Bearish - Pullback continues. Plenty of room to go down.
- Chart - 4h: Bearish - Getting close to oversold, so need to be mindful, but this one can press hard into oversold as it’s done many times before.
- I’ve removed 1h and less because I’m not very focused on that short of time frame right now.
Trading Plan (Monday):
- I haven’t been doing many intraday trades, just swings.
- I’m full bear mode right now, so puts are all I’ll enter until we hit 396/400. I currently have no positions after Friday.
- Swing - Buy: I’ll be looking for any pop (405+) to buy some late September puts and holding them.
- Swing - Sell: If I get them, I’ll be looking at 396.50 as exit level.
Week Ahead: August 22, 2022 - SPY 410/430 range; DXY is key all week; JPow + PCE on Friday 🌶
Economic Calendar #1: https://www.marketwatch.com/economy-politics/calendar
Economic Calendar #2: https://stonks.chat/feed/catalysts
- Monday: Nothing.
- Tuesday: Not much, PMI at 9:45am
- Wednesday: Nothing.
- Thursday: Nothing exciting.
- Friday: PCE @ 8:30am (very important); UMich Sentiment @ 10am; JPow speaks from Jackson Hole @ 10am EST 🌶
Thoughts - General:
- SPY kept marching up last week, topping out at 432 and then (finally) started pulling back - closing at 422 on Friday. Impressive, SPY, well done 👏
- I’m looking for another 10 points of a dip to add to Friday’s 6 (total of 20 off the high - ie 410/412)
- Tuesday looks red - PMI data will released; Europe is in bad shape and UK may get to 15% on inflation in 2023 (probably where US is, in reality)
- DXY - should keep inching up on the back of US rate hikes and Europe/elsewhere getting worse
- I don’t see anything else until Friday when the real party starts. 🎉
- PCE is out on Friday morning at 0830am - very important to Fed. The market will have one hour to react before JPow speaks, so the VIX should make for some expensive options for 30-45minutes.
- JPow will speak at 10am EST from Jackson Hole where he and his banker buddies are having their annual meetup.
- He’s known to be more hawkish in the wild. He could move the market down quickly if he pushes back that inflation isn’t peaked yet and he’s going to keep bringing the heat to the tune of 0.75% or higher.
- On the flip side, if he has folks thinking it’ll be 0.50% in September and we will just go down from there on hikes, then put on your moon shoes. He’ll send it.
- It could go either way because the others seem to be a bit more hawkish than him after the July meeting came across.
- This is why you can’t hold anything overnight that’s one-sided. I’ll do an overnight straddle (Friday 0DTEs) on Thursday at the close - market will have been waiting all week for a reason to go big in either direction - so they will.
- Overall? I’d guess Monday is pretty flat. Tuesday is down. Wednesday flat/down. Thursday flat/down. Friday very green.
- The underlying economy is getting worse and I think we’re in the final hoorah stage of this cycle. I expect us to push higher, maybe even testing all time SPY high, but then…..it’s coming way, way down and setting new lows. I wanted to post this chart over weekend, but I didn’t get around to. I will…
Thoughts - Technical:
- SPY levels (no change from last week): 405, 416, 420, 429.50, 437
- Chart - Weekly: Bearish/Neutral - looks like a small pullback in play before it pushes higher.
- Chart - Daily: Bearish - Pullback in progress (that I was waiting for lat week…)
- Chart - 4h: Bearish - Same
- Chart - 1h: Neutral/Bullish - Hmm, this one could pull up hard if it has a spark.
Trading Plan (Monday):
- It’s getting a bit tough to do daytrades because the range is so muted and volume so light. Swings are probably the way to go right now, so I’ll do both - but with higher confidence in the Swings.
- Daytrade Scenario 1: If we open below 420, give it 15 min, then calls back to 420+.
- Daytrade Scenario 2: If we open above 423, puts to 420.
- Swing Scenario 1: Puts at 423-425 Monday. Hold until Wednesday/Thursday. Get the hell out of the way before Friday.
- Swing Scenario 2: Take the week off. Do a straddle on Thursday before the close. Sell after PCE & JPow send it one way.
Market Day Ahead - August 16, 2022 - SPY - 423/432 range; WMT & HD will call it; waiting on that pullback. 🤡
SPY | SPX Trading Plans (Tuesday)
- Scenario 1: We open above 430 on good WMT/HD news, I’ll do nothing - I can’t stomach calls up here - yet.
- Scenario 2: If we open above 430 on bad/mixed WMT/HD news, I’ll add another SPX put - I like pain.
- Scenario 3: If we open below 425 on bad/mixed WMT/HD news & housing data, I’ll be looking to exit my SPX puts around 423-425.
Review & Analysis…..
What Happened Today (Monday)
- SPY traded between 425 and 429
- Neither scenario played out - which was fine. I was conflicted as hell in my Week Ahead, so sidelines was a good seat.
- I did fumble the ball on my puts. I was given a gift at the open of 425 and didn’t pull the trigger (I was at a tidy profit on the ones I held over weekend). I was looking for 424 and little did I know that the open would be the low of the day. So now I’m still holding them at 428. 🤡 stonks.chat/user-trades/978
- The only news of significance I saw was “US: NY Fed Empire State Manufacturing Index slumps to -31.3 vs. 8.5 expected” — this is what caused the dip in premarket - but this was shrugged off within 5 minutes of the open. Impressive, but maybe not smart - that print wasn’t insignificant.
- We otherwise just had a low volume bull Monday, similar to Friday
Technicals (Latest)
- SPY levels: 405, 416, 420, 429.50, 437
- Chart - Weekly: Bullish - this one suggests the Hot Girl Summer Rally still has more to go. (Same as Sunday)
- Chart - Daily: Bearish - overbought. Pullback or consolidation incoming. (Same)
- Chart - 4h: Bearish - painfully overbought. Pullback or consolidation incoming. (Same, even more painful to look at.)
- Chart - 1h: Neutral - the chart is overbought, but it’s still pushing. 🤷♀️
Looking Ahead (Tuesday)
- WMT & HD report in premarket - this will set the tone for retail (TGT + Retail Sales numbers are Wednesday).
- I’m awful at earnings, but my guess? WMT paints a cautiously optimistic picture having already warned (front loaded bad news) and peak inflation on the mind. HD - guess? meet expectations and warn it’s cooling (a lot of their business is in “not necessary”)
- It’s another day for the bulls if they can keep running. If WMT/HD don’t whiff, there is room to keep going on the weekly chart.
- If we get a dip for any reason to 424 or lower, I’ll probably exit my puts and try to figure out what’s really going on out there (easier when you don’t have a position bias - which is why I like to exit every day) 🧘
- This is either one epic bull trap + bear market rally (60 points!), or the music really has changed.
- Looking at the weekly again, it sure looks like it has tons of gas left in it - 450/460. It just looks like every other 6 month bull run we’ve ever had. I still think this is most likely from my Week Ahead “If that’s correct, then we’re going to work these overbought technicals out by consolidation, not a pullback - at least initially. I can see another 7-10 trading days of consolidation up here pretty easily, but if it follows Nov 2021 chart, we’ll get a 20 point pullback on the SPY to fully sort the chart out after that 10 day period.” — so late next week…
Scary chart for bears (SPY Monthly, Long-term)
Week Ahead: August 15, 2022 - SPY 416/430; Hot Girl Summer Rally in final stretch?; Retail & Fed Minutes this week.
Economic Calendar #1: https://www.marketwatch.com/economy-politics/calendar
Economic Calendar #2: https://twitter.com/DeItaone/status/1558488392832372737/photo/1
- Monday: Nothing, really. Empire manufacturing at 0830?
- Tuesday: Nothing.
- Wednesday: UK CPI @ 2am; Retail Sales @ 0830; FOMC MINUTES at 2pm ⚠️
- Thursday: I don’t see much right now.
- Friday: Nothing.
Thoughts - General:
- SPY closed last week at 427 - a full seven points higher than I thought possible. 🤯
- Despite that, I traded reasonably well last week, my scenarios hit every day I think. I got whacked on Friday (cost me entire week’s gains) when I went against my planned scenario and fought the tape intraday.
- That was dumb and a good reminder to trade the plan - or not at all. The scenario I had for Friday played out for a profit, it’s only when I went rogue I got rocked.
- Unfortunately, I piled more on Friday, so let’s hope (I hate using that word in the market - kiss of death) that we get a solid dip on Monday on the back of those way overbought technicals - I’ll exit and reassess.
- In last week’s “week ahead”, I suggested two scenarios were possible on the chart. It looks pretty clear it’s this one “October 26, 2021 - went from 455 to 470 by November 8, 2021 before cooling off” and I think the narrative out there supports it - as much as I don’t like it.
- If that’s correct, then we’re going to work these overbought technicals out by consolidation, not a pullback - at least initially. I can see another 7-10 trading days of consolidation up here pretty easily, but if it follows Nov 2021 chart, we’ll get a 20 point pullback on the SPY to fully sort the chart out after that 10 day period.
- The week is pretty limited on market moving news. The only landmine I see is Wednesday’s FOMC minutes. It’s likely that JPow saying “neutral” is what provided rocket fuel to this rally. If the minutes reveal that’s not the case and he got ahead of himself or words twisted - it’ll pullback on Wednesday pretty hard. Unlikely.
- General market thoughts…..
- I’m still a bear overall. I think we see new lows EOY or 1Q2023
- The sentiment has gone very bullish - as the chart shows - on the back of CPI and “peak inflation” narrative
- I do not think this changes the position of the Fed for September 16. In fact, it likely emboldens them to keep it at 0.75 again - and get that balance sheet ramped up for more selling (it’s very slow pace currently)
- Fed aside, you can’t ignore that MSFT, GOOGL, AAPL all came out with strong guidance. I think this + JPow neutral comment is primary drivers of this rally.
- Are the tech majors really going to power through this with almost no scars? AAPL is just shy of its all time high. MSFT isn’t too far itself. Incredible…
- Check out this long-term monthly chart of SPY below. It screams pullback to the line - but when? Why?
- The post-covid run we know what happened - QE. That’s over with now - we assume - so what exactly is pushing this up so hard from 363?
- It’s dangerous on both sides right now. The chart is begging to be shorted, but it just keeps powering up.
- The VIX is low at just under 20 right now - though it can go even lower. Use this as an opportunity to go shopping for long term options, if you are confident in a direction in 6-12 months
- DXY is likely to consolidate here with no news on horizon, so nothing exciting here.
- Oil is key. If it runs again, inflation isn’t peaking. I think this is what will cause the pullback.
- In summary, I’m still bearish - but I’m mindful of just how strong the SPY can rage when the bulls are in charge of the ship. They are currently sitting in the Captain’s chair sipping the finest rum and enjoying the ride.
Thoughts - Technical:
- SPY levels: 405, 416, 420, 429.50, 437
- Chart - Weekly: Bullish - this one suggests the Hot Girl Summer Rally is well in progress and still has more to go. Grr..
- Chart - Daily: Bearish - overbought. Pullback or consolidation incoming.
- Chart - 4h: Bearish - painfully overbought. Pullback or consolidation incoming.
- Chart - 1h: Neutral - consolidation with bias to the upside
Trading Plan (Monday):
- Scenario 1: If we open below 425, puts to 423/422.
- Scenario 2: If we open above 428, calls to 430 (max), then stand back - the technicals will be scorching.
- I think we’re in a right range on Monday. There’s no news, so it’s going to be chop/consolidation. Wednesday is the day we ride.
- I lean towards Scenario 1 with maybe a small pop at the open, then a few point pullback. Nothing major.
Market Day Ahead - August 11, 2022 - SPY - 416/425 range; CPI gave us moon shoes; consolidation to upside on Thursday
SPY | SPX Trading Plans (Thursday)
- Scenario 1: We open above 421, calls to 425 (max) if you’re feeling frisky.
- Scenario 2: If we open below 418 on bad PPI, then puts to 416.
- I really don’t feel strongly about either scenario, but think Scenario 1 is most likely.
- I want a pullback, but just don’t see it on Thursday right now. I’d actually like to see us go even harder into overbought, then have a nice ‘pay your technical taxes’ day on Friday to close the week out.
Review & Analysis…..
What Happened Today (Wednesday)
- SPY traded pretty tightly between 417 and 420
- We gapped up so hard on CPI data that it spent the day consolidating up in the stars
- 🏆 “Scenario 1: If we gap to 415/416 on good CPI data (cool), give it a few minutes to dance at the open, then calls for a few points, max 420. Don’t try to flip over to puts - dangerous game.”
- Samosa called it even better in his Preview - stonks.chat/group/9/posts/582
- The market loved the CPI data. It was cool coolish on headline & core, so that’s all it needed to spread ‘peak inflation’ narrative all over the place - and that’s what happened.
- That’s all the mattered today.
Technicals (Current)
- SPY levels (updated): 405, 416, 420, 425
- Chart - Weekly: Neutral/Bullish - so impressed by this one. It’s been speaking to us for weeks now saying bulls were taking it….still room to go, too.
- Chart - Daily: Neutral - this one is reaching the top of the RSI, so a pullback is coming - but might not be quite yet.
- Chart - 4h: Neutral/Bearish - back into overbought we go. Same, pullback is coming soon - but it won’t be too big with this CPI data now
- Chart - 1h: Neutral - consolidation.
Looking Ahead (Thursday)
- CPI data gave the bulls something to run with, for sure. How long will it last?
- Inflation hasn’t gone away. It’s just slowed down for a month.
- There’s plenty of people that think oil prices haven’t peaked yet - and if they take off again - it’ll wreck that CPI again. I’d say I’m in that camp.
- The Fed isn’t going to slow down with just one CPI that’s better than expectations. We’re still way above 8% (and they know that number isn’t real, much higher)
- I know I sound bearish on what’s a very green day and what seems like positive news on the inflation front, but I need to get into the details on it (this weekend)
- We’re talking about tomorrow, though - so let’s do that.
- Consolidation with a lean to the upside is all I see for Thursday. The bears only have some overbought conditions to lean on. Bulls have the narrative.
- I’m having a hard time making a case for either side for more than a few points, so I doubt I’ll do much on Thursday.
- I’m going to need to spend the weekend doing some research
- We’ve got PPI data on Thursday morning @ 0830
Week Ahead: August 8, 2022 - SPY 400/420; CPI on Wednesday; PPI Thursday; mixed technicals.
Howdy, friends. 👋I’m back. I was away for a week or so. I didn’t make any trades during this time and didn’t follow the market. So, I’m coming in fresh.
Economic Calendar: https://www.marketwatch.com/economy-politics/calendar | https://twitter.com/DeItaone/status/1556289624091332608/photo/1
- Monday: Nothing.
- Tuesday: Nothing.
- Wednesday: China CPI, Germany CPI, US CPI - all premarket. Fed Speakers @ 11am and 2pm
- Thursday: PPI in premarket
- Friday: UK GDP, France CPI in premarket; UMICH Sentiment @ 10am
Thoughts - General:
- SPY 413 - wow. Last trade I made, it was 391. Looks like Hot Girl Summer Rally started while I was offline.
- Looking at just the charts, I think there’s two scenarios that could play out in the coming days/weeks
- October 26, 2021 - went from 455 to 470 by November 8, 2021 before cooling off
- OR June 7, 2022 - consolidation before jumping off a cliff
- We’re likely to consolidate to the slight downside until Wednesday - when CPI + Global CPI numbers come in - which will either send HGSR on its way higher OR stop it in its tracks - for now.
- The rally we’ve seen seems a bit silly - maybe it's not - but the SPY/market in general just wants to go up - for any reason it can find. It’s default is always to the upside. THere’s also piles of cash on the sidelines that has been waiting for a reason to jump in -- and earnings season wasn’t a let down.
- JPow doing another 0.75 (second in a row) makes it seem like we’re on the right track to taming inflation.
- We’re likely to see some inflation numbers cooling in this Wednesday CPI report, especially the headline (impacted heavily by falling gas prices), but Core CPI may be a bit tougher to shake — but they will look for ANY positive in the numbers to push it up
- Government is warming up its cash firehose again - climate, health, chips, etc. bills in excess of $500B. They’re going to make it rain.
- All this sure seems like the final leg before a recession/bust comes in. The warning signs are popping up everywhere in the ECONOMY, not necessary the stock market; despite the job report on Friday.
- We also had a better than I expected earnings season - but don’t ignore those warnings we got. On the flip side, we got some very bullish guidance from the majors (MSFT, AAPL, etc)
- It’s tough. There’s opinions on both sides that make sense. Technicals are mixed at best.
- Regardless of next couple weeks, I think we pull back very hard in 4Q when real economic situation rears its head
- I need to read more this week, for sure. Look for further updates during week.
Thoughts - Technical:
- SPY levels: 390 (major), 396, 405, 416, 420
- Chart - Weekly: Bullish - it broke through the lines/clouds it needed to. Bravo, very impressive. I didn’t think it was going to happen, but it was warning it was possible for a couple weeks. This one says hold my beer, we’re going higher.
- Chart - Daily: Bearish - getting ready to pullback.
- Chart - 4h: Bearish - overbought. This is the main one I’m focused on.
- Chart - 1h: Neutral - consolidation.
Trading Plan (Monday):
- Scenario 1: If we gap to 416, taking puts down to 412/410.
- Scenario 2: If we open below 413, puts to 410. Close out. If 410 breaks to 409, look to re-enter and possibly hold overnight to 405.
- I can only justify puts right now. Calls are off the table with these RSI/MACD conditions.
- I think Scenario 1 most likely. Scenario 2 looks like a big stretch and unlikely.
- I am going to let one SPX trade out for the entire scenario that happens and not lock in profit early. Only at the price triggers I set. I’ve been seeing too many of these scenarios play out by end of day and I was selling too early and not letting it play out.
SPY, 4h
Week Ahead: July 25, 2022 - SPY 380/410; Stock Market Super Bowl Week; let’s do this! 🍿
Economic Calendar: https://www.marketwatch.com/economy-politics/calendar | https://twitter.com/DeItaone/status/1551271851145531394/photo/1
- Monday: Nothing.
- Tuesday: Consumer Confidence Index & New Home Sales @ 10am
- Wednesday: FOMC Rate Hike @ 2pm; JPow takes the mic @ 2:30pm ⚠️
- Thursday: Normal stuff + GDP @ 0830
- Friday: Personal Income & Spending @ 0830
- Monday: Nothing interesting.
- Tuesday: Major Dow components PM, MSFT, GOOG, V in AH
- Wednesday: Smaller Dow components in PM, META & QCOM in AH
- Thursday: Dow components in PM (picking up a theme here..), AAPL, AMZN, INTC in AH ⚠️
- Friday: Oil squad reports in premarket (XOM, CVX, etc)
Thoughts - General:
- TLDR: I think we end red on the week, mostly on the back of weak earnings reports/guidance.
- US Earnings season shifts into high gear this week and will be the key driver (more so than FOMC, in my opinion)
- Bad news is good news, good news is bad news. This week will be full of that.
- It will be full of big algo dumps on data/news releases. Read what was actually written/said. Sometimes it’s a buying opportunity, sometimes you need to hold the line, others it’s just bad and you’ve got to cut it. Just read it yourself before reacting - don’t rely on a single candle’s price action to do your homework.
- Monday: If you didn’t get your rest over the weekend, take Monday as a breather before the insanity starts. I don’t expect much of anything except chop.
- Tuesday: Consumer Confidence pace of drop should be slowing - but not improving overall. US consumers are running up debt and down savings - which will show up - eventually - in earnings reports. New Home Sales print won’t be good. Big names reporting earnings today, won’t speculate, I’m awful at ER.
- Wednesday: After morning earnings, it’ll be calm until the FOMC storm at 2pm. Then JPow takes the mic and anything goes. My take? I don’t expect much on the 2pm release, it’s going to be 0.75% (though I wish it was 1%) so that’s pretty well baked in. The Q&A session can put big candles on the charts, though, and that will be the highlight. Key here is what he hints about September FOMC. I’d expect this to be a green day overall. META is likely to Zuck us again though - so no holding overnight.
- Thursday: We’ll get processing of whatever JPow said (there’s always a delay, it seems). Then we’ve got AAPL & AMZN in the evening. Afterhours/futures will soak up most of that fun, so Friday open won’t be much fun.
- Friday: Oil earnings & Personal Income/Spending data premarket. This latter report could take some of the air out of any strong news from AAPL/AMZN, but not all of it. Let’s look at this when we get there.
- I don’t think it’s any surprise that there are going to be some poor earnings and guidance. It remains to be seen who the market will shrug it off for and who it will punish.
- It should go without saying - there’s not a night on the calendar this week you should consider holding overnight. Close the hell out. Please. 😅
- IF we end the week very red, this sets us up for Hot Girl Summer Rally - that’s coming.
- IF we end the week green, then Hot Girl Summary Rally has started.
- To be fair, the charts are hard to call and there’s a LOT of new fundamental information coming this week, so I admit I’m unclear / not confident - and actually won’t be trading too much due to that.
Thoughts - Technical:
- Charts. This isn’t really the week to rely on technicals because of all the FUNDAMENTAL events happening (that can smack the hell out of technicals)…..but let’s update them anyways.
- SPY levels: 380 (major) > 385 > 390 (major) > 393 > 398 > 400 (psych) > 410 (major)
- Chart - Weekly: Neutral/Bullish - it’s still pushing on up, 410 would be a real break. This is the week, if so.
- Chart - Daily: Neutral.
- Chart - 4h: Neutral / Lean Bearish
- Chart - 1h: Neutral / Lean Bearish
- Chart - 30m: Neutral / Lean Bearish
Trading Plan (Monday):
- Scenario 1: If we open below 395, puts to 393/390. Tough trade.
- Scenario 2: If we open above 397, calls to 400. Another tough trade.
- As noted earlier, I expect chop on Monday. There may be no trade worth bothering with unless a company reports early warning or an international event kicks off.
SPY, weekly - note RSI
Week Ahead: July 18, 2022 - SPY 380/393 this week; international economic data; US earnings
Economic Calendar: https://www.marketwatch.com/economy-politics/calendar | twitter.com/DeItaone/status/15...
- Monday: Nothing.
- Tuesday: Eurozone CPI data @ 5am EST
- Wednesday: UK CPI (June) @ 2am EST; US Home Sales @ 10am
- Thursday: ECB Lagarde @ 8:45am
- Friday: S&P PMI Data @ 9:45am
Earnings twitter.com/DeItaone/status/15...
- Monday: More banks - BAC, GS, SCHW (all PM)
- Tuesday: some industrials (PM), Netflix (AH)
- Wednesday: Tesla (AH)
- Thursday: loads of industrials/Dow (PM)
- Friday: AXP, VZ, TWTR (PM)
On Watch
- International: Many reports (CPI) from Europe, elsewhere. This will mess with futures. Careful holding overnight this week. ⚠️ DXY ⚠️
- NEXT WEEK: Most important earnings of the season - Tech: MSFT, META, QCOM, AAPL, AMZN, GOOG, etc3
- REMINDER: FOMC is July 27 (0.75-1.00 rate hike…)
Thoughts:
- It’s an almost silent week on US economic data. Fed Speakers are in quiet period, as well.
- It’s an active week on International economic data, though. I’m saying it again - don’t hold overnight. Futures will wreck your shit before you have a chance to react.
- DXY will be on the move this week - and we know what that can do…
- US Earnings season shifts up a gear this week and will be the star of the show for the next 10 trading days.
- I don’t think it’s any surprise that there are going to be some poor earnings and guidance. It remains to be seen who the market will shrug it off for and who it will punish.
- I don’t see much else to talk about here. We’re really winding up for a key earnings season + FOMC. So let’s get to the charts.
- SPY levels: 373 > 375 > 380 > 385 > 390 > 393 > 398
- Chart - Weekly: Neutral. It’s trying to turn into Bullish. I don’t see it with my Fundamental Hat on, though.
- Chart - Daily: Bullish. RSI turning up, clouds crossed
- Chart - 4h: Neutral. Winding up for a big move.
- Chart - 1h: Bullish - can go a bit more to 390 or so, but then it will be overbought.
- Chart - 30m: Neutral - it’s right at the top of the range on RSI - it’s going to pullback soon.
- The charts are pointing higher over the medium-term. Maybe a very short-term pullback. My bearish view doesn’t like this, but I’ll go along. My only concern is a bull trap being set for earnings season.
- One last time - don’t hold overnight or into PM/AH earnings. Unless you just need to scratch your gambling itch.
Trading Plan (Monday):
- Scenario 1: If we open above 387, we’re going to test 390. I don’t see us getting beyond that on Monday (30m/1hr charts) - so I’d look to exit at/before that line.
- Scenario 2: If we open below 385, I’d probably just sit tight and do nothing. It’s probably going to consolidate all day, with a lean towards upside. (There’s a lot of bullish sentiment that kicked off on Thursday.
- I’ve got some SPX I held over weekend (bought right at the close), would like to exit those at the open. If futures hold (+0.41% right now), that’s happening.
- Scenario 1 looks most likely to me for Monday.
Market Day Ahead - July 13, 2022 - SPY - 373/390; CPI day; lots of thoughts; brace for big volatility.
What Happened Today (Tuesday)
- SPY traded 386/379
- Scenario 1 - and only one I wanted to play - played out damn near perfectly: “Scenario 1: It opens wherever, no other major news, chop until 2pm. At 2pm, as long as we’re around 385 or below 380 already, I’ll play puts and close by end of day - no way am I holding overnight into CPI on Wednesday.”
- At 2pm, it was just under 385. Started falling and drilled all the way to 379 (more than I expected) by the close, then bounced two points to close at 381.
- Only problem was I had other obligations at this time, so I wasn’t able to play it. It was satisfying, either way.
- Oil took a walloping today -8% or so on “recession fears” — but Samosa there’s more to the story than that and we’ll learn more after CPI data drops.
- That was about it. Calm before the storm tomorrow.
Looking Ahead (Wednesday)
- Reports: CPI @ 0830 - this is, without question, event of the month so far. Get ready.
- Earnings: Delta (premarket)
- What else is there to do except speculate on the CPI?
- I think we’ll get hottest CPI headline/overall number yet - if not 9% then very close.
- CPI Core - and there is where the focus needs to be because it’s what the Fed uses - may show some cooling. This value excludes food and energy (which is silly as hell).
- We could have an immediate push down on a hot headline number, but then a bounce on a cooling Core.
- If both come in hot, then see you at 373 (or lower).
- If core comes in cool, I think we’ll see 375 in premarket and then a bounce back over 383 (at least, 390 comes in view)
- There’s some merit to Samosa’s argument that if Core is cooling, then they’ll push hard on the Headline saying we’re topped out “but look at oil! it’s down huge from June highs” - to try to make this entire thing bullish.
- If they are successful or the data gives any reason to believe inflation top is in (I don’t think it is), there’s also tons of cash sitting on the sidelines right now in fear of recession+inflation raging. They just need a decent reason to jump back in - it will be a tidal wave when it happens.
- …. but then we have earnings season coming in starting this week. So much to consider. Buckle up for volatility.
- DXY, VIX, TNX will all be on the move as well, so options are going to be very expensive at the open. Resist temptation, IMO. Bull or bear trap will be set.
- SPY levels: 373 (major) > 375 > 380 (major) > 385 > 390 (major) > 393
- Chart - Weekly: Bearish (Long-term)
- Chart - Daily: Bearish, but a confusing cloud crossing. On watch
- Chart - 4h: Bearish
- Chart - 1h: Neutral - nearing oversold.
- Chart - 30m: Neutral - touched oversold today.
SPY Trading Plans (Wednesday)
- Consider Samosa’s scenarios for Wednesday - he’s deep in this matrix on this event - https://stonks.chat/group/9/posts/532
- Scenario 1: Headline CPI hot + cooling Core - letting it open and get a few candles out of the way, then looking to buy end of July CALLS for a 5 point SPY flip by EOD.
- Scenario 2: Headline CPI hot + hot Core - buying PUTS and will close them by EOD.
- Scenario 3: Headline CPI cooling + cooling core - buying CALLS at the open and looking for 5 point SPY jump by EOD (it’ll already be up a hell of a lot by the open)
- Scenario 1 is what I think is most likely. It’ll also include a big bear trap.
- Let’s make some money and have some fun.
Week Ahead: July 11, 2022 - SPY 380/393 this week; CPI; ramp up week for earnings/data in July.
Economic Calendar: https://www.marketwatch.com/economy-politics/calendar | https://twitter.com/DeItaone/status/1545757452112650248/photo/1
- Monday: Nothing.
- Tuesday: Nothing.
- Wednesday: CPI @ 0830am EST; data release of the week.
- Thursday: PPI at 0830am; China GDP @ 10pm
- Friday: UoMich Sentiment @ 10am
On Watch
- International: Unrest in Sri Lanka, China ( ZHENGZHOU ), and of course Russia/Ukraine
- International: Inflation reports on Wednesday from several countries
- Earnings season kicking off with Pepsi on Tuesday PM, Delta Wednesday PM, TSM (Semis) on Thursday PM
- REMINDER: FOMC is July 27
Thoughts:
- There’s quite a lot going on for rest of July. This week feels like a ramp up week of data/reports/moves.
- CPI is on Wednesday - I, like most others, expect it to continue to tick up (8.8% YoY and 1.1% MoM are expectations - though it’s much higher). This will cement whatever the Fed is leaning towards.
- At this stage, I expect 0.75% for July 27. I don’t see how they can do any less. There’s even a chance for 100bps, though unlikely.
- Earnings kick off - as I said, ramp up week, but it’s some old line S&P500 companies, so they’re going to set the pace for the others. I think we’re going to see lots of revised guidance and lower ends mentioned.
- With inflation so hot (still), upcoming rate hikes (0.75% almost guaranteed), and just international chaos going on — why aren’t we at SPY 350? Well…
- Despite the bad news, there is some good news: oil prices are dropping, jobs are still hot hot, unemployment low, some sectors are the economy are at pre-COVID levels, the Fed is restoring some credibility - finally - by raising rates at a sensible speed, and the US Dollar is strong as hell.
- It’s not all about the Fed, even though much of the focus is rightly there.
- That said, I think this week or two of optimism we had is just a step on the way down and the bear market will continue as earnings come out.
- SPY levels: 375 > 380 > 385 > 390 > 393 > 398
- Chart - Weekly: Bearish (though it’s trying to turn up - don’t see it happening long-term)
- Chart - Daily: Bullish. RSI turning up, clouds crossed (as expected in last week’s Week Ahead)
- Chart - 4h: Neutral. This one could go either way from here.
- Chart - 1h: Bearish. RSI and MACD both say it’s coming down to 375?
- Chart - 30m: Bearish. Same, downward trend started after slapping overbought on RSI.
Trading Plan (Monday):
- Scenario 1: If we open at 385 or below, look for a 380 test on Monday. I wouldn’t expect that to break. There’s still plenty of bullish sentiment and room on the chart right now.
- Scenario 2: If we open at 387 or higher, you already know - we’re testing 390. After that, I’ve got lines at 393 and 398.
- I think Scenario 1 is most likely. Based on futures, we’re looking red, but I don’t expect it to be brutal (though my overnight puts would be happy). There’s no known news coming out on Monday or Tuesday. Heading into Wednesday, however, there’s much to consider. We’ll evaluate it then.
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