**What We Know:**
1. Jobs report Tuesday was bad: short term bullish, long term bearish
2. UK almost shit the bed, but didn’t: short term bullish, long term bearish
3. Credit Suisse almost imploded, but didn’t: short term bullish, long term bearish
4. Fed called “emergency meeting” that wasn’t really an emergency: no real signal
5. People think the Fed meeting, and CS, and UK, and Jobs might make the fed pivot: short term bullish, long term who knows
6. 10yr and 2yr rates have come down from their recent peaks: bullish
7. OPEC+ is reducing production: bearish
8. Volume has been very low: bearish, as the move higher has no conviction
**What is Coming:**
1. A more important jobs report Friday. If its bad (less than expected), it is bullish because it implies Fed will be closer to pivoting
2. CPI October 13th: If its good (less than expected), it is bullish because it implies Fed will be closer to pivoting
3. Potentially a lot of geopolitical and financial issues – or not
**Context:**
1. Powell/Fed just recently gave a dot plot that clearly shows no pivot is coming this year. To remain credible, they need to deliver on their word
2. If we rally too much, and rates come down too much, then financial conditions are loosening. Fed seems very committed to be restrictive, which means more tightening. A rally will be met by a tighter fed, killing the rally. If you want the fed to stop, there needs to be capitulation and pain.
The last time we had a “inflation has peaked, the fed won’t be so hawkish” rally it lasted 7 days and moved 5%, on 30m in volume
https://preview.redd.it/qjtzyb8kaxr91.png?width=716&format=png&auto=webp&s=edbf91ebbc298217aa0f70768b67eacc424922a7
As of last night, the current rally has moved 6% in \~4 (trading) days on 16.5m in volume. We have given almost 2% of that back already this AM.
​
https://preview.redd.it/gfghdecpaxr91.png?width=978&format=png&auto=webp&s=e30005800c99417f0d271d1961a9a0ddeeaf7da0
Notice the RSI has bounced and is almost at the top of the range already.
​
[Cave paintings](https://preview.redd.it/seyyiov5bxr91.png?width=1173&format=png&auto=webp&s=902ce0ed297f86524c3ec2856478d8d6fa3974e2)
**Where do we go from here?**
* We broke 375 to the upside, which was a recently contested price point (pink line)
* The next meaningful area up is 380 (orange line)
* If we fall back below 375, like this AM, we probably retest the lows and go lower. Unless:
* If we get a bad (which means good) jobs report on Friday, we at least go to 380
* If we get a good (meaning less than expected) CPI on October 13, we go to 390+
**Powell / The Fed Controls This Market**
Just keep in mind, Powell keeps saying the same thing: we need meaningful evidence that inflation is coming down. We are going to stick with it. There will be pain etc. The point is, the Fed already told us what the plan is for the rest of this year, and we don’t hear from them *until November.* The plan is in place, no reason to assume it will change.
**Will the Rally Continue?**
For the rally to continue we need very strong, and repeated evidence that inflation is coming down, we need for Credit Suisse and UK to not blow up, we need Russia to not use Nukes, we need oil to not get too high, we need no other problems from the rest of the world, and we need the cash on the sidelines to keep investing thinking that the bottom is in. The hopium must sustain us until the Fed speaks again, and THEN the fed needs to say something dovish.
**Will the Rally Fail?**
To go down, we *anything* to spook the market. Any better than expected, the economy is still hot report will confirm this is a bear market rally and send us back to at least the lows to be tested again.
**The Way I Will Be Trading it Is:**
* Sell the -380/+390 call spreads, end of October expiration. Add to this position each time the market makes the very unnatural looking sustained moves higher. As VIX contracts, these sold calls really won’t loose much even if we move higher. If VIX is coming down, sold calls don’t hurt as much.
* If the Jobs report is really bad, we are going higher. Buy back the 380s, and leave the 390s until the CPI report October 13th.
* On October 13th, if CPI report is hot again, sell the 380 calls again. Use the cash received from the 380s to buy 355 puts expiring end of October (same exp date). VIX will have collapsed to 25-27 so the puts will be relatively “cheap”
* As VIX expands, and we move lower, the puts are going to print and your sold call spreads are going to print.
* As we approach the lows, sell the 345 puts, completing a debit spread if you think we are going lower. Sell the 365 puts creating a credit spread if you think we are going higher. (I will write another post at this time)
* On October 13th, if CPI report is below expectations, it will be very bullish. Sell a -380/+370 put spread and keep your 390 calls. Hold for a few days… (I will write another post at this time)
This bounce was expected, and I got it right last time: [https://www.reddit.com/r/wallstreetbets/comments/xn2wn6/how\_to\_win\_the\_week\_of\_926/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/wallstreetbets/comments/xn2wn6/how_to_win_the_week_of_926/?utm_source=share&utm_medium=web2x&context=3)
View Reddit by mytendies – View Source
LEARN ABOUT: Investing During Inflation
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
So funny to think that a bad job report is actually bullish as this implies an earlier pivot. The question is will they pivot lol? it will all depend on how inflation will be. If inflation has peaked this could be true.
So many variables. And OPEC announcing today that they’re cutting production is bad/bearish for CPI mid-term, but it won’t be reflected in the number we get next week.
It’s all fucked, so sniping in and out on very short term plays is what I’m focusing on.
Take profits when they present themselves, and break even or shore up and sell at 50% losses when your trade has slipped. It’s usually past the point of no return.
Just take a moment to reflect on your overview/implications.
Are the US Markets capable of functioning without any FED QE?
When bad econ news is good…because Fed QE pivot.
And good econ news is bad…because Fed QT.
Simple answer:
– US Market is a meth addict
– JPOW is Heisenberg
The US Market needs rehab.
Wanted to add a few things. No point in worrying about the nukes. If Russia uses nukes, the US & other NATO members will use nukes. Most of us will likely be dead and if you’re alive non-contaminated water is going to be worth more than your portfolio regardless of how much you had in it before.
Inflation wise I think it’ll be down a bit, but not sure how much. There’s a point where people get pissed off about price hikes and just refuse to buy anything that isn’t strictly necessary. I’m personally seeing it and yeah I know, small sample size bla bla bla so this view is kinda instinct based.
No clue on the jobs reports, could be anything, but so far the hint we have is that it’ll be below or near expectations.
Will it be enough to change the Fed stance? Probably not, but institutional investors are going to be buying in a bit just in case and I doubt shorts are going to open new positions and will be holding them into those key dates.
Risk reward favors the bulls right now imo, but if SPY goes to 390-400 that’s going to shift.
Last thing, EUR/USD is likely to retrace today’s dip and bulls are going to be aiming for the sep high. Bears want to see it stall at 1, but I think risk/reward favors bulls again. If the narrative shifts to weakening USD we might get further upside even if the cpi & jobs data is only in line with expectations.
Tl;dr: Generally agree, but it just feels wrong to short just yet. I think it has room to still run.
Just so you know, im taking this as financial advice. Will report back later!
I wish I could read.
We’re on the 200 ema and have only been there a few times in history
This guy fucks
Keep it simple. All in calls SPY.
Setting up some Strangles expiring Oct 21. What are your thoughts about Straddles and Strangles in this market?
Just sold my first call spread, will see how it works out. thanks for the in depth analysis!
So what’s your opinion on buying long dated puts today?
Hoping my 10/14 puts break even!!
How do you think midterms play out in a market like this?
May be things are already begining to crack under the hood and they know it. It’ll just take a while for the news to reach us.
Today was crazy, dropped at open and just touched the overnight gap from 04OCT and reversed before filling, then a sprint to try and break 380.
While today was exciting, I’m mostly interested in the large volume of deep ITM puts that traded towards EOD. Put premium traded today was 3x calls. And the last 30 minutes of trading was probably 80% puts. This is after a pretty nice drop in IV over the last few days. Really interested in seeing the OI on these tomorrow. I have seen these deep ITM puts come through last week (which i thought were associated with JPM reconfiguring their collar), only none of the volume was held overnight, no change in OI.
>People think the Fed meeting, and CS, and UK, and Jobs might make the fed pivot: short term bullish, long term who knows
If the Fed pivots at the beginning of a recession (I don’t think NBER has announced a recession yet, feel free to correct me), is that even going to be bullish? Doesn’t the recession overshadow any bullishness?
Cleveland fed nowcast is showing a slightly cooler CPI than forecasts, and slightly hotter core CPI than forecasts. Will be interesting to see how the market will react.
Personally I’m holding some 18NOV 370 & 375p through the report, will hedge a bit going into next Thursday.
For those who don’t know.
This play, if SPY move up 5% in a few days, you will hit max loss on your credit spread right there.
To buy back that -380 will be expensive, so make sure you don’t use up all of your collateral on the spread.
Finally, keeping the +390 to wait and see will cause you double whammy if the Fed played at you with silent MBS/T-Bonds selling.
Buying 345 puts when low VIX is probably the better bet here.
My 2 cents is to wait until an obvious end of fake rally like when SPY hit $395+ before taking any credit call spread.
I’m too nervous/poor/have too low of options level trading to sell options 🙁 I feel like I have to stick to buying only for now.