Markets are extremely erratic and next week brings elections and core CPI

The wild swings we are seeing on a daily basis have forced me to continuously hedge my trades. With elections next week and Core CPI number coming out on Thursday, I am glad that I am fully hedged. Many economists are guessing that markets are expecting a Republican sweep which is why we are seeing some rallies here and there. In my opinion, that is purely guesswork. Just let things play out and act accordingly, there is no point in guessing anything. 

SPY 6M daily – No clear direction

We are seeing some divergence between the indices this week, so I added all 3 here. SPY is just hanging in there and hasn’t breached that support like at $360 yet.

QQQ 9m daily – Nasdaq looks horrendous!

QQQ looks horrible. We have taken out the long term support at $270 yet again and are very close to this year’s lows. One unexpected news next week and we will be making fresh lows for the year.

DIA 9m daily – DOW is leading the charge

If it weren’t for the DOW stocks, we would have already seen new lows for this year. Earnings season helped DOW stay strong, and it is currently experiencing a technical rejection at $330 resistance. If nothing ugly happens next week, we could take out this resistance. But again, it is a week full of significant binary events, so I am not very inclined towards paying attention to technical analysis this week.

Market moving events next week

Election on Tuesday and Core CPI on Thursday. Flip a coin to see where we go next. As long as you are hedged, there is nothing to worry about.

Earnings Nada!

There are literally no earnings from our watchlist next week. I added DIS but even that is now below $100 and technically excluded from our watchlist.

Macro Analysis (VIX)

VIX has dropped rapidly and is near the 22 level which represents stable markets. But with 2 binary events lined up next week, it is hard to imagine that VIX will stay calm.

Spread Tracker 

  • I am fully hedged for all nearby expirations which can be affected by elections and CPI, so not too worried about market direction.
  • 11/11 has 1 closed winner and if markets start going up, COST will become a loser. MDB has zero hope of coming back into play, so I might end up slightly negative next week if markets go up.¬†
  • 11/18 and 11/25 are fully hedged.
  • 12/2 is leaning slightly bullish (but not much). But I have enough time to react based on where we are by next Friday.

Key Takeaways

  • Elections Tuesday
  • Core CPI Thursday