Mixed Bag
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The Markets
The bad news banks continue.
The Fed has increased its balance sheet dramatically, essentially reversing 6 months of Quantitative Tightening. Interest rates have come down quickly. The probability of the Fed increasing rates by 50 bps next week is virtually zero. A 25 bps hike at the March meeting followed by one more 25 bps hike in May is the higher probability scenario now.
The ‘higher for longer’ narrative is changing.
Banks are down.
1 Month Performance
Tech is up
1 Month Performance
Confused yet?
Don’t be. There is a logical business and economic reason for this. But as long as you’re managing risk properly there’s no urgent need to figure that out right away. For now, there are many unresolved issues; in the banks, the Fed, the economy, and in the charts.
This is a good time to do less.
Fewer positions. Smaller position size. And a lot of patience.
The Charts
SPY - Lots of back and forth, but ultimately it’s gone nowhere this week.
Open last Friday - $390.99
Close this Friday - $390.17 0.21%
Does it feel like nothing happened?
The 8 EMA, 200 SMA, and the Oct. 2022 low AVWAP are all within a $1.01 range. Indecision prevails as traders, investors, and money managers try to figure out what’s next.
QQQ - This has been the strongest group, by far. Today it found resistance.
IWM - Small caps are trying to stay above the $170 pivot. Below that would likely send prices back to the 2022 low.
DIA - Sandwiched between the flat 200-day MA and the flat anchored VWAP, in a bearish consolidation pattern. A move below the AVWAP would very likely lead to a continuation lower.
DXY - The lower Dollar may be helping some stocks, but not all.
VIX - Volatility isn’t going away quietly
This has been a busy week, and one with much uncertainty. That will probably continue next week as we have the Fed and interest rates Wednesday.
Let’s take the weekend to unplug and refresh a bit. Maybe watch some basketball.
I will have the Weekend Weekly Charts Saturday morning, as usual. Come hang out with me and we’ll keep an eye on the news and banking developments, and see how the bigger-picture charts are developing.
Find it here. @Andy__Moss Tell a friend.
Oh, and Happy St. Paddy’s Day 🍀
***This is NOT financial advice. NOT a recommendation to buy, sell or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) an SEC registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.
It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors prior to making any investment decision.
POSITION DISCLOSURE
March 17, 2023 4:00 PM
Long:
Short: SBNY
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike