Massive earnings next week followed by CORE PCE
Markets appear to be putting in a double-bottom near the June lows and I am slowly dipping my feet into some bullish trades. However, next week is crammed with earnings surprises, followed by CORE PCE on Friday. This is a make or break week for this tiny relief rally. I will continue to trade in the direction of the trend but at the same time not mess around with my put hedges as we have no idea what next week will bring.
All major indices are bouncing off of June lows
We didn’t fall through the June lows which is excellent news. Otherwise, I was expecting us to revisit pre-covid crash levels pretty quick. Having said that, 1 green week is not enough to gauge market direction. If all the big boys report good earnings next week, we can add more meaning to this rally and continue trading bullish.
SPY 3Y weekly – At the 30,000-foot view, nothing has changed
Zooming out to a 3-year weekly chart, we are still languishing around June lows, and we will only know by next Friday if we have a relief rally in place. If earnings are good, that is enough reason for these markets to continue rallying going forward. I am hoping to get a 6-8 week rally, so I can make some money instead of constantly hedging my positions.
Market moving events next week
It doesn’t get any busier than this. Just look at the earnings calendar below. Earnings will move the markets next week. As if that is not enough, we have that CORE PCE number being released on Friday which will give us some insights on inflation.
Busiest week in earnings
Just look at the earnings calendar. Wow! It doesn’t get any busier than this. The red squares are stocks from our watchlist reporting earnings. The blue ones are important stocks that reflect the state of the economy and are important in determining market sentiment.
Macro Analysis (VIX)
VIX is rapidly dropping but don’t expect any stability in the markets unless we drop below 22. If earnings are good next week and CORE PCE doesn’t disturb the markets, expect VIX to drop to lower 22s as early as Friday.
- 10/28 and 11/4 are hedged between calls and puts. I am hoping that we get a big move next week (either up or down) so that we don’t find ourselves in no man’s land where the markets haven’t dropped enough for the puts to materialize and haven’t gone up enough for the calls to materialize.
- I don’t plan to touch my put hedges until next Friday because we will not know market direction until then.
- For 11/11 and 11/18 I have slowly started taking bullish trades in the direction of the current trend (i.e bullish). If we continue to go up next week, that is what I intend to do for future expirations as well.
- Earnings and core PCE will send these market in any direction
Congrats! we have moved from the dark-depths of bear market to the next stop. Hope we can sustain this movement in the coming weeks.