Attack of The Hawk
Fed Chair Powell testified to the House today. Like yesterday, he continued with his hawkish rhetoric. As things currently stand, I consider a hawkish Fed to be bearish for the stock market. There is currently a 78% chance the next Fed rate hike (March 22nd) will be 50bps. This is a considerable increase from the 31% chance that existed before Powell testified to Congress -- I suppose that's what "more hikes and a higher peak" will do. As we continue to degenerately trade this market, I highly recommend paying attention to the various economic developments coming out soon (Unemployment Rate, CPI Report & Retail Sales). These data drops all have the capability of prompting even more volatility in the markets.
As discussed yesterday, I'm closely watching the dollar. If (and it's a big if) the dollar breaks out, I'll be looking for the market to fall hard af.
With respect to the overall market, I won't have many strong opinions until we break above $407 or below $392.
Market Events: March 9th
08:30 AM Jobless Claims
10:00 AM Fed Gov Barr Speaks
Seasonality Update
S&P 500 Seasonal Bias (March 9th)
- Bull Win Percentage: 64%
- Profit Factor: 4.31
- Bias: Bullish
Equity Curve -->
Current Account Value (March 8th)
$10,842
Daily Realized P&L: +$110
YTD Realized P&L: +$784
Closed Position(s) +$110
TSLA $220/$222.50 CCS (5) March 24th
- Original Credit: $0.37/ea
- Closed Debit: $0.15/ea
- P&L: +$110 (+59.5%)
New Position(s)
OXY Put Credit Spread (10) March 31st
- Sold: $58 & Bought: $57 --> Credit: $0.20/ea
- Max Return: $20/ea & Max Risk: $80/ea
- Profit Target: $0.08/ea
- Profit Odds: 76%
Reasoning: The Oracle of Omaha, Warren Buffet, recently purchased an additional 5.8M shares of OXY. When he makes moves, the market general supports him. Additionally, I'm personally bullish on oil. I don't see oil dropping below $70/barrel anytime soon. My thesis is that the Biden Administration would be forced to buy at those levels after draining the Strategic Petroleum Reserve. Between Buffet and Biden, this seems like a “high odds” play to me.
QQQ Call Credit Spread (10) March 31st
- Sold: $312 & Bought: $313 --> Credit: $0.20/ea
- Max Return: $20/ea & Max Risk: $80/ea
- Profit Target: $0.08/ea
- Profit Odds: 80%
Reasoning: Pretty simple, honestly. The Fed is still hawkish, so I'm still bearish. Eazy peazy.
Current Position(s)
COIN Call Credit Spread (5) March 17th
- Sold: $72 & Bought: $77 --> Credit: $0.50/ea
- Max Return: $50/ea & Max Risk: $250/ea
- Current Value: $0.62/ea
- Profit Target: $0.20/ea
- Profit Odds: 81%
META Call Credit Spread (5) March 17th
- Sold: $190 & Bought: $192.5 --> Credit: $0.33/ea
- Max Return: $33/ea & Max Risk: $217/ea
- Current Value: $0.75/ea
- Profit Target: $0.15/ea
- Profit Odds: 66%
META Put Credit Spread (10) March 17th
- Sold: $170 & Bought: $167.50 --> Credit: $0.18/ea
- Max Return: $18/ea & Max Risk: $232/ea
- Current Value: $0.21/ea
- Profit Target: Undecided
- Profit Odds: 88%
SPY Call Credit Spread (3) March 17th
- Sold: $409 & Bought: $412 --> Credit: $0.56/ea
- Max Return: $56/ea & Max Risk: $244/ea
- Current Value: $0.51/ea
- Profit Target: $0.25/ea
- Profit Odds: 81%
QQQ Call Credit Spread (5) March 24th
- Sold: $313 & Bought: $315 --> Credit: $0.38/ea
- Max Return: $38/ea & Max Risk: $162/ea
- Current Value: $0.30/ea
- Profit Target: $0.15/ea
- Profit Odds: 84%
NVDA Call Credit Spread (2) March 31st
- Sold: $270 & Bought: $275 --> Credit: $0.71/ea
- Max Return: $71/ea & Max Risk: $429/ea
- Current Value: $0.89/ea
- Profit Target: $0.25/ea
- Profit Odds: 82%
SPY #2 Call Credit Spread (4) March 31st
- Sold: $415 & Bought: $417 --> Credit: $0.42/ea
- Max Return: $42/ea & Max Risk: $158/ea
- Current Value: $0.32/ea
- Profit Target: $0.20/ea
- Profit Odds: 84%
WMT Call Credit Spread (10) March 31st
- Sold: $145 & Bought: $146 --> Credit: $0.20/ea
- Max Return: $20/ea & Max Risk: $80/ea
- Current Value: $0.10/ea
- Profit Target: $0.08/ea
- Profit Odds: 88%
SPY #3 Call Credit Spread (5) April 6th
- Sold: $414 & Bought: $417 --> Credit: $0.55/ea
- Max Return: $55/ea & Max Risk: $245/ea
- Current Value: $0.60/ea
- Profit Target: $0.20/ea
- Profit Odds: 80%
My Thoughts
I truly believe something is brewing. I think there is a high chance of the market seeing a big, multiday trend in the near future (I'm biased to the bearish side). It's tough to know when this big trend will start. It could be the Unemployment Report this Friday. It could be the CPI Report next Tuesday. It could even be both. Markets commonly expand, contract and then expand again. Even though volatility has been picking up over the past few trading days, we've done a good job of going essentially nowhere. Patience will pay. Wait for the move.
With respect to my positions highlighted above, I'm not particularly worried about any of them at this moment. Obviously, insanity could strike at any moment, but I'm comfortable for the time being. I do wish I skipped on the new QQQ CCS today. It didn't help with the high correlation of my plays. Other than that, I'm essentially waiting around for Friday (the next major report). My assumption for tomorrow is technical chop.
Thanks for reading -- Much love!
Notes
Max Return (Credit Spreads): The credit received when creating the position. This is achieved when you get to the expiration date and the price is below the sold contract for a Call Credit Spread and above the sold contract for a Put Credit Spread.
Max Risk (Credit Spreads): The difference between the spread's two strikes minus the credit received when the position was created.
Breakeven (Credit Spreads): The sold strike plus the credit for CCS and the strike minus the credit for PCS.
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Both of these trades missed. Both of these trades hit if held until close -- 4 total units!
These PCS's were sold at $2.20/ea and were bought back at $0.40/ea -- THIS MEANS MY REALIZED GAIN WAS $3,600!!!
These PCS's were sold at $1.00/ea and were bought back at $0.10/ea -- THIS MEANS MY REALIZED GAIN WAS $1,800!!!
Both of these trades missed. Both of these trades hit if held until close -- 4 total units!
These CCS's were sold at $0.80/ea and were bought back at $0.20/ea -- THIS MEANS MY REALIZED GAIN WAS $1,200!!!
