New Highs, FTW!
Talk about deja vu. Inflation is ripping higher, the government is adding debt at a record rate, and the economy is starting to show serious cracks. Don't worry though! The stock market just hit another new all-time high. This seemingly illogical situation has been the story of the market since 2020 -- We've totally been here before.
I fully appreciate that this combination seems contradictory, but it's actually not. When the economy gets rough, the Fed loves to print money to battle the situation. This increase in money supply causes inflation to pump higher, which can be directly felt through the devaluation of the dollar. Here's a fun fact for you! In the past 3 years, the cumulative inflation rate is roughly 20%. This means in only 3 years, your dollar lost 1/5 of its purchasing power. Congrats!
Anyway, the stock market isn't much different. When the entire system has more money, it gets poured into assets such as stocks, real estate, etc. This drives nominal prices higher, but the increase doesn't necessarily outpace inflation. In more direct terms, a company with a $1B market cap a decade ago was more valuable than a company with the same market cap now. Stocks are rarely, if ever, discussed in an inflation adjusted manner. If they were, it would become apparent that we aren't at a new high when you consider the dollar's devaluation.
What does this mean for you trading? To be honest, not much. Your trading will be better if you understand what's happening and what's prompting the moves, but your goal is the same. As an active trader, you want to accept minimal risk while attempting to capture the "meat of the move." We live in the world of smaller timeframes. The world of investing would be much more concerned with how the macroeconomic backdrop will look decades out in the future. There is a time and place for both, but please don't fall into the trap of conflating the two. Trading is a game of reaction while investing is a game of prediction.
Everything you need to know about the upcoming week is posted below. Godspeed!
Later, Skater!
Thicc Kohrs
P.S. The official Goonie Discord is live! (FREE Access w/ code GOONIE: https://bit.ly/GoonieGroup)
Market Events
Monday, May 27th
ALL DAY Market Closed for Memorial Day
Tuesday, May 28th
09:55 AM ET Minneapolis Fed President Neel Kashkari Speaks
10:00 AM ET CB Consumer Confidence (May)
01:00 PM ET Fed Gov. Cook & Fed President Daly Speak
Wednesday, May 29th
01:45 PM ET New York Fed President John Williams Speaks
02:00 PM ET Fed Beige Book
07:00 PM ET Atlanta Fed President Raphael Bostic Speaks
Thursday, May 30th
08:30 AM ET GDP (QoQ) (Q1)
08:30 AM ET Initial Jobless Claims
10:00 AM ET Pending Home Sales
12:05 PM ET New York Fed President John Williams Speaks
05:00 PM ET Dallas Fed President Lorie Logan Speaks
Friday, May 31st
05:00 AM ET Eurozone CPI (YoY) (May)
08:30 AM ET PCE Price Index (MoM) (Apr)
08:30 AM ET PCE Price Index (YoY) (Apr)
08:30 AM ET Personal Income (Apr)
08:30 AM ET Personal Spending (Apr)
09:45 AM ET Chicago PMI (May)
Upcoming Earnings
Monday
None
Tuesday
Evening: Cava
Wednesday
Morning: Advanced Auto Parts, Chewy & Dick's
Evening: C3.AI & Salesforce
Thursday
Morning: Best Buy, Canopy Growth, Foot Locker & Kohl's
Evening: Costco, Dell & Ulta
Friday
None
Seasonality Update
S&P 500 Seasonal Bias (Monday, May 27th)
- MARKET CLOSED
S&P 500 Seasonal Bias (Tuesday, May 28th)
- Bull Win Percentage: 68%
- Profit Factor: 2.17
- Bias: Bullish
Equity Curve -->
S&P 500 Seasonal Bias (Wednesday, May 29th)
- Bull Win Percentage: 52%
- Profit Factor: 1.49
- Bias: Neutral
Equity Curve -->
S&P 500 Seasonal Bias (Thursday, May 30th)
- Bull Win Percentage: 52%
- Profit Factor: 1.37
- Bias: Leaning Bullish
Equity Curve -->
S&P 500 Seasonal Bias (Friday, May 31st)
- Bull Win Percentage: 47%
- Profit Factor: 0.17
- Bias: Bearish
Equity Curve -->
Notes: These analytics are derived from the performance of the S&P 500 futures contract over the past 25 years. Additionally, results are computed from the futures market open and close.
Options Strategy Update
The 0 DTE signal hit 6 for 8 times (11 for 13 total units) this past week.
Signal Accuracy: ~75%
It goes without saying I prefer when Piper bats one thousand, but I'm still happy with the recent performance. The accuracy was slightly low, but the losing day was the minimum unit sizing. Things are slowly chugging along as we wait for the return of volatility -- That's when the market will become more interesting and (hopefully) even more profitable.
Piper's Current Signal Streak: 2 Trades
May Record: 36/40 Units
Monday May 20th
SPY Put Credit Spread (2x Multiple @ $529 / $528) 🟢
QQQ Put Credit Spread (3x Multiple @ $451 / $450) 🟢
Tuesday May 21st
No Signal Generated
Wednesday May 22nd
SPY Put Credit Spread (2x Multiple @ $530 / $529) 🟢
QQQ Put Credit Spread (2x Multiple @ $455 / $454) 🟢
Thursday May 23rd
SPY Put Credit Spread (1x Multiple @ $528 / $527) 🔴
QQQ Put Credit Spread (1x Multiple @ $456 / $455) 🔴
Friday May 24th
SPY Put Credit Spread (1x Multiple @ $526 / $525) 🟢
QQQ Put Credit Spread (1x Multiple @ $454 / $453) 🟢
Times I Got Severely Burned on The Beach
1 (Singular occurrence but it's still enough to make me look like a lobster) *
* 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
RISK WARNING: Trading involves HIGH RISK and YOU CAN LOSE a lot of money. Do not risk any money you cannot afford to lose. Trading is not suitable for all investors. We are not registered investment advisors. We do not provide trading or investment advice. We provide research and education through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security. Information contained herein should not be considered a solicitation to buy or sell any security or engage in a particular investment strategy. Past performance is not necessarily indicative of future results. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites.
Both of these trades hit if held until close -- 6 total units!
Both of these trades hit if held until close -- 6 total units!
SPY missed & QQQ hit
The Trump-China-Trade announcement from the NYT knocked me out of my position. The CCS's were sold at $1.80/ea and I was forced to buy them backl at $4.40 -- This means my realized loss was $3,120 :(
The hedge did exactly what hedge plays are meant to do. It balanced me out! These PCS's were sold at $0.85/ea and expired worthless -- THIS MEANS MY REALIZED GAIN WAS $2,975!
