Month: May 2022

Last week was full of earnings reports, economic events, and statements by the Federal Reserve. 

This week, the main economic event we’re focusing on is the Consumer Price Index (CPI) report released on Wednesday morning. This report will tell us if consumers are paying more or less for goods and services. This ultimately gives us a gauge of inflation.

We’ll tie the CPI report into our thesis for the week and lay out the different scenarios we could see if this catalyst gives the market a relief pop or drops it lower.

On Monday, the S&P 500 (/ES) dropped to the major key zone from $4,055 to $4,029 we’ve been discussing. We took advantage of this move in the Simpler Day Trading Room with SPX puts, locking in profits to start the week.

In the video above, we’ll lay out major liquidity levels and scenarios we could see if SPX reverses structure heading into the CPI report.

Here is our focused list:

SHOP — If SHOP breaches $334, look for it to break down to the major zone from $305 to $282. If it starts to pop through $355, look for SHOP to work its way through $383 to point of control (POC) at $401.50.

ROKU — See if ROKU can first pop to $92 for short opportunities. From there, look at the $97 to $103 zone to short again. Our targets to the downside are $83, $80, and the earnings low at $75.

Stay Focused!

After the Federal Reserve statement on Wednesday, the S&P 500 (SPX) short squeezed up to its 21 exponential moving average (EMA). On Thursday, the market flushed and wiped out the entire move. In hindsight, this would have been a spot we’d like to short the SPX and names like AAPL and TSLA.

We’ll wait for the next potential bounce to enter our short positions. Ideally, we want to enter these positions as close to the 21 EMA as possible.

In this video, we’ll review key things to keep in mind heading into next week and names on both our bearish and bullish watchlists that we’ll look to short on a pop or buy on a dip.

Stay Focused!

The big question heading into next week is whether or not we get a shortable bounce. The weekly and 3-day squeezes in the S&P 500 (SPX) continue to look poised for more downside, as they haven’t even fired short yet.

In terms of shorting the bounce, in hindsight, it would have been great to short the post-Fed pop on Wednesday. 

After Federal Reserve Chairman Jerome Powell wrapped up his speech, we saw the SPX, QQQ, and names like TSLA rally into their falling 21 exponential moving averages (EMA). We didn’t take any action into that pop (aside from taking profits on long positions), so we are patiently waiting for the next bounce before initiating our shorts.

Remember that heading into next week, we have the indices trading below -2 average true ranges (ATR) on the daily charts with a put/call ratio above 1. Often when the market finds itself in this position, there is a potential for a short squeeze around the corner.

As bearish as things look, we suggest being careful playing the short side until we see a brief relief rally. If we do, we’ll be ready to open shorts on the SPX as close to the 21 EMA as possible.

Stay Focused!

Our final catalyst for the week is the Nonfarm Payroll (NFP) job report on Friday morning before the market opens. This economic event is our chance to see what big money wants to do for the rest of the week, whether sending this market even lower or giving a relief pop.

We are in a bearish market, so we will continue to focus on shorting the pops. 

After the FOMC event on Wednesday, the S&P 500 (/ES) had a large cover pop to $4,300. On Thursday, the /ES broke through point of control (POC) and started to head toward the previous low of the year at $4,101.

In the video above, we’ll lay out key levels on /ES where we’ll look to enter our short positions. We’ll discuss the rest of the major indexes, volatility, and our SHOP setup after a disappointing earnings report dropped it lower than the expected move.

Stay Focused!