The Bears Are Here
Oh Brother!
I suppose I picked the wrong month to try out this whole sobriety thing. The market is getting pummeled. If you've been trying to catch the falling knife, I pray for your hands. If you've been bearish this entire time, I envy your PnL. Regardless of what side you're on, plenty of opportunities are on the horizon.
Last week brought to light a few significant developments. From a macroeconomic perspective, the reported GDP exceeded expectations, and the PCE (inflation) report met predictions. Various Fed members made numerous public statements. Most of them, including Chair Powell, continued to emphasize rates will be 'higher for longer.' I believe they are wholeheartedly committed to this stance given the current state of inflation, demand, and consumer sentiment.
The precarious nature of inflation is enough to prompt volatility. However, when it rains, it pours. We are in the middle of Earnings Season. Microsoft, Amazon, and Intel all posted a solid beat. Google reported disappointing numbers. Meta (Facebook) reported solid earnings that were quickly forgotten due to concerning guidance. The party will continue this upcoming week with Apple—fingers crossed.
The following includes the major economic reports, key earnings, and the price levels across the market for the upcoming week I consider to be pivotal. Enjoy!
Your Brother,
Matt
Market Events
Monday, Oct. 30th
09:30 PM ET China Manufacturing PMI (Oct)
Tuesday, Oct. 31st
06:00 AM ET Europe CPI (YoY) (Oct)
10:00 AM ET CB consumer Confidence (Oct)
Wednesday, Nov. 1st
08:15 AM ET ADP Nonfarm Employment Change (Oct)
10:00 AM ET ISM Manufacturing PMI (Oct)
10:00 AM ET ISM Manufacturing Prices (Oct)
10:00 AM ET JOLTs Job Openings (Sept)
02:00 PM ET FOMC Interest Rate Decision -- STREAMING THIS!
Thursday, Nov. 2nd
08:30 AM ET Initial Jobless Claims
Friday, Nov. 3rd
08:30 AM ET Unemployment Rate (Oct)
08:30 AM ET Nonfarm Payrolls (Oct)
08:30 AM ET Average Hourl Earnings (MoM) (Oct)
09:45 AM ET S&P Global Services PMI (Oct)
10:00 AM ET ISM Non-Manufacturing PMI (Oct)
10:00 AM ET ISM Non-Manufacturing Prices (Oct)
Upcoming Earnings
Monday
AM: McDonalds & SoFi
PM: Pinterest & Public Storage
Tuesday
AM: BP, Caterpillar, JetBlue, Marathon & Pfizer
PM: AMD
Wednesday
AM: CVS, Norwegian & Wayfair
PM: Airbnb, Etsy Paypal, Roku & Qualcomm
Thursday
AM: Crocs, Moderna, Palantir & Shopify
PM: Apple, Carvana, Cloudflare, Coinbase, Draft Kings & Starbucks
Friday
AM: CBOE & Fubo
Note: This is NOT the full list -- I included the names of companies that are popular within the Goonie Community.
Seasonality Update
S&P 500 Seasonal Bias (Monday, Oct. 30th)
- Bull Win Percentage: 57.7%
- Profit Factor: 1.11
- Bias: Neutral
Equity Curve -->
S&P 500 Seasonal Bias (Tuesday, Oct. 31st)
- Bull Win Percentage: 50%
- Profit Factor: 1.02
- Bias: Neutral
Equity Curve -->
S&P 500 Seasonal Bias (Wednesday, Nov. 1st)
- Bull Win Percentage: 61.5%
- Profit Factor: 1.99
- Bias: Bullish
Equity Curve -->
S&P 500 Seasonal Bias (Thursday, Nov. 2nd)
- Bull Win Percentage: 61.5%
- Profit Factor: 1.26
- Bias: Leaning Bullish
Equity Curve -->
S&P 500 Seasonal Bias (Friday, Nov. 3rd)
- Bull Win Percentage: 69.2%
- Profit Factor: 2.08
- Bias: Bullish
Equity Curve -->
Options Strategy Update
The 0 DTE signal went 10 out of 10 (~100% accuracy).
I'm starting to think that this trading strategy will be taking my title of Best Trader on This Side of The Mississippi. After batting 1000 last week, the 0 DTE has once again showcased perfection this week. There are only two questions that remain. Will the streak continue? Second, will I grow the balls to put serious money behind that strategy?
Monday Oct. 23rd
SPY PUT Credit Spread ($418 / $417) 🟢
QQQ PUT Credit Spread ($351 / $350) 🟢
Tuesday Oct. 24th
SPY PUT Credit Spread ($422 / $421) 🟢
QQQ PUT Credit Spread ($356 / $355) 🟢
Wednesday Oct. 25th
SPY CALL Credit Spread ($422 / $423) 🟢
QQQ CALL Credit Spread ($357 / $358) 🟢
Thursday Oct 26th
SPY CALL Credit Spread ($418 / $419) 🟢
QQQ CALL Credit Spread ($351 / $352) 🟢
Friday Oct 27th
SPY CALL Credit Spread ($416 / $417) 🟢
QQQ CALL Credit Spread ($349 / $350) 🟢
Charts of Interest
The overall market is getting crushed. Over the past two weeks, there have three major technical breakdowns. The $428 and $424 was sliced back-to-back in mid-October. Last week, the bears pushed & closed the market below the key $411ish level. My next bearish target is the gap fill at $407. If this were to snap, I'd then be watching $404. On the other hand, if the bull camp wakes up and mean reversion plays out, I'd be focusing on $414, $417.50, and then $420. I'd argue both situations are equally likely. Yes, the bears are in clear control, but price is getting overextended to the downside according to various indicators.
The QQQs, aka the tech sector, is also getting hammered. As of now, the Nasdaq is holding onto support by the skin of its teeth. If this bull channel ends up officially failing, the next levels of support in my book would be $341 follow by $339. The bottom trendline serves as support and price starts to bounce, I'd want to see a retest of $351 then $353.
Bitcoin, digital gold, the currency your parents still don't understand, is continuing its bullish trip upward. The excitement surrounding the potential approval of a spot ETF has once again put this "internet money" back into the mainstream. If $31k can hold, I'd be confident in the bulls testing $37k and then $39.5k.
Tesla is seemingly making up its mind about what direction the next major leg should be. As the consolidation above $200 continues to play out, I suggest patience. It doesn't pay to be early or late. You want to be right on time. If $202 doesn't hold, $195 and $178 would be up next. Above $212, would setup $222 followed by $230.
I fear Nvidia is starting to show some serious warning signs. Beyond the clear technical breakdown of the trendline, the neckline on a major head & shoulders is in danger of being snapped. If the key level of $400 doesn't hold, I'll be watching for a retest of $366. I'm not saying this will happen soon, but don't forget about the downside gap fill to $306 (this would slaughter the tech sector). A recapture of $440 would suggest that the recent price action is a good ole fashion bear trap.
Apple is still working to fill out its bearish wedge. I've decided to include this chart because of the impending earnings. Bottom side support is $164 imo. If $172 is recaptured, a $174 breakout could setup $178.
No special notes, but orange juice is still squeezing.
Times I Cried In The Shower
69 *
* This data point is from readings over the past week. The reported information should not be taken as an aggregate or cumulative value for any period beyond the most recent week (Sunday through Saturday). Appropriate alterations were made to account for both travel and time zone shifts.
Notes
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Both of these trades hit if held until close -- 4 total units!
