Spread Tracker holding ground so far!

Despite some crazy weeks, the open trades for the last couple of weeks and the following weeks seem to be holding their ground so far. Due to the bipolar market environment we are in, I am being forced to balance my trades between bull call spreads and bear put spreads. Last week all the bull calls were negative but the bear puts were positive and it all flipped within a few days, but we are still seeing a net positive yield so far. The “trick” I have been using so far is to add bullish trades on signs of positive moves and back filling bearish trades around the 14 day mark if the markets haven’t picked a direction yet. This has been working really good and I intend to keep doing this until we see drop below 22 level.

CPI and Bank Earnings will decide what happens next.

We had an overall positive week and we are hitting up against that first resistance zone between $295 and $300 for QQQ as shown below. But technical analysis is rendered useless when you are faced with a binary event. The only thing to pay attention to this week is the CPI print on Wednesday and the Big Banks reporting earnings on Friday. That’s the only take away for the coming week. 

QQQ 6M Daily Chart 

It seems obvious (barring any horrible outcome from a binary event like CPI) that the worst of the worst seems to be behind us and we are simply consolidating until the market finds a reason to break out of this sideways momentum (either to the upside or downside). On a 6M chart, you can clearly see that QQQ is bouncing between $270 – $300 for now. Any bad news will quickly drop is back to $270s and good news has the potential of taking us to $310 before we see signs of resistance.  

    Market Moving Events – CPI| Bank Earnings

    Just look at the 2 highlighted events. CPI and Bank Earnings. There is nothing else to pay attention to in the coming week .These 2 things decide where we go next. 

    The Big Banks start reporting earnings next week (JPM, MS, FRC, WFC, CITI, PNC, BLK)

    The week is jam packed with earnings from the big financial institutions. This sets the mood for the earnings season guys! Any ugly surprises or negative reaction to good earnings will show us how the market will react to this earnings season. 

    Macro Analysis (VIX)

    VIX is again making an attempt to drop below 24. If the CPI print is good and earnings follow through, don’t be surprised to see VIX drop like a rock to 20 as early as next Friday. Since we are faced with a binary event, any ugly surprises nullifies any recovery attempts and we will be looking for next lows for the year.

    Key Takeaways

    • There is just one takeaway – CPI and Earnings rule next week. A very important week in my opinion. I will most likely not trade until the CPI numbers come out next week.

    CHEAT-SHEET (No changes here)