Market behaviour & correlations since 1971 (FIAT)Long term, equities are more closely correlated with the Fed's balance sheet than they are with T-Yields, Fed Funds, or Commodities.
IWM
6/12/22 XLESPDR Select Sector Fund - Energy Select Sector ( AMEX:XLE )
Sector: Miscellaneous (Investment Trusts/Mutual Funds)
Market Capitalization: $--
Current Price: $88.71
Breakout price: $90.50
Buy Zone (Top/Bottom Range): $84.30-$74.05
Price Target: $112.00-$114.20
Estimated Duration to Target: 133-140d
Contract of Interest: $XLE 9/16/22 90c
Trade price as of publish date: $5.90/contract
6/12/22 KWEBKraneShares Trust CSI China Internet ETF ( AMEX:KWEB )
Sector: Miscellaneous (Investment Trusts/Mutual Funds)
Market Capitalization: $--
Current Price: $37.80-$39.60
Breakout price: $32.70
Buy Zone (Top/Bottom Range): $31.60-$26.35
Price Target: $37.80-$39.60
Estimated Duration to Target: 50-53d
Contract of Interest: $KWEB 8/19/22 35c
Trade price as of publish date: $2.38/contract
6/12/22 KKellogg Company ( NYSE:K )
Sector: Consumer Non-Durables (Food: Major Diversified)
Market Capitalization: $23.618B
Current Price: $69.58
Breakout price: $70.00
Buy Zone (Top/Bottom Range): $68.65-$66.90
Price Target: $72.60-$73.80
Estimated Duration to Target: 49-52d
Contract of Interest: $K 7/15/22 70c
Trade price as of publish date: $2.00/contract
6/12/22 AMZNAmazon.com, Inc. ( NASDAQ:AMZN )
Sector: Retail Trade (Internet Retail)
Market Capitalization: $1.116T
Current Price: $109.65
Breakdown Price: $108.60
Buy Zone (Top/Bottom Range): $115.75-$129.10
Price Target: $101.30-$99.30
Estimated Duration to Target: 38-40d
Contract of Interest: $AMZN 7/15/22 110p
Trade price as of publish date: $5.90/contract
Leading Indicators are very BearishThe JNK ETF is heading further down with a big bearish Marubozu that is the YTD low -> Bearish for equities.
The IWM ETF is also heading further down for a lower low with a bearish Marubozu engulfing -> Bearish for equities
The DJT ETF ended on a recent low too -> Bearish for equities
The VALUG has a bearish candle for more downside -> Bearish for equities
The TIPS ETF bearish marubozu ending on a YTD low-> Bearish for equities
The TLT ETF is diving -> no flight to safety, just selling.
The VIX is coiling -> bearish outlook for equities, more volatility incoming when it spikes!
The HG1! copper futures ended on a strong low for the week, and will be attacking support. Expect failure.
Overall, very Bearish bias on equities for the next couple of weeks, and at least until the VIX spikes very hard before retracing (it is only coiling now...)
Opening (IRA): IWM July 29th 155 Short Put... for a 1.61 credit.
Comments: Targeting the <16 strike in the expiry nearest 45 days paying around 1% of the strike price in credit to emulate dollar cost averaging into the broad market. Still have July 1st, July 8th, and July 22nd rungs on.
Rolling: IWM July 22nd 202 Short Call to 197.5... for a .93 credit.
Comments: Rolling in the untested side of my July 22nd short strangle to maintain a <1.0 delta/theta ratio. Total credits collected of 3.80.
Russell 2000 Bear Trend
Well.
1) Macro bullish symmetrical triangle fakeout leading to top signal.
2) Low volume on bullish break, High volume on reversal confirming fakeout.
3) Omicron Variant market reaction =~= Covid-19 market reaction
See SPY fakeout before March 2020 Covid-19 crash. (right)
Lastly, see bearish divergence between index and % of stocks above 200 ma (orange).
several ways to end this weekim imagining if we touch these levels where the paths are we will exhibit the following patterns friday- monday
Opened: IWM July 22nd 167.5/202 Short Strangle... for a 3.18 credit.
Comments: These WERE 16 delta strikes on both sides when I opened this using my phone app at around 9:45 CST. In any event, 3.18 credit on BPE of 21.00; 15.1% ROC at max as a function of BPE; 7.6% at 50% max. Will look to adjust sides on side test/approaching worthless or a delta/theta ratio >1.0. (The ratio is currently 5.97/10.48 or .57).
Opened (IRA): IWM July 22nd 162 Short Put... for a 1.65 credit.
Comments: Did some in the Q's, some in SPY ... . Figured that I might as well go for the trifecta. Targeted the <16 delta strike in the expiry nearest 45 days' duration paying around 1% of the strike price in credit to emulate dollar cost averaging into the broad market.
Will look at net delta tomorrow and determine whether I need to adjust my hedges to keep net delta "happy."
RTY MFI OversoldRTY MFI is oversold, the other indices are not even close.
Market did rally off RTY last week, so I flipped all my puts. Gonna sit back and watch now, since I'm not sure what the market is gonna do.
Rolled (IRA): IWM June 17th 179 Short Put to July 22nd 169... for a 1.03 credit.
Comments: Mechanically rolling out at 50% max to the <16 delta strike paying around 1% of the strike price in credit in the expiry nearest 45 days. Total credits collected of 3.76 (See Post Below) plus the 1.03 here for a total of 4.79 relative to the July 22nd 169 short put value of around 1.80, so I've realized gains of 2.99 ($299) so far.
Doing this reduces risk not only because the strike is lower, but also because I collected a credit to do it, reducing my cost basis even further.
RTY UpdateChart pattern and indicator directions looks bearish.
NQ MFI is oversold though, which is why I didn't comment earlier, was expecting a sector rotation day. Now NQ looks weak despite being oversold.
Looks to me like strictly an Euro futures pump, if futures sell off then garbage stocks are toast. They didn;t rally with the market at all.
6/5/22 ITBiShares U.S. Home Construction ETF ( AMEX:ITB )
Sector: Miscellaneous (Investment Trusts/Mutual Funds)
Market Capitalization: $--
Current Price: $60.52
Breakout price: $61.00
Buy Zone (Top/Bottom Range): $59.80-$54.00
Price Target: $67.40-$68.80
Estimated Duration to Target: 138-145d
Contract of Interest: $ITB 10/21/22 60c
Trade price as of publish date: $5.80/contract
6/5/22 LENLennar Corporation ( NYSE:LEN )
Sector: Consumer Durable (Homebuilding)
Market Capitalization: 23.216B
Current Price: $80.19
Breakout price: $81.10
Buy Zone (Top/Bottom Range): $79.55-$69.45
Price Target: $99.10-$102.40
Estimated Duration to Target: 237-240d
Contract of Interest: $LEN 1/20/23 85c
Trade price as of publish date: $8.50/contract
6/5/22 LMTLockheed Martin Corporation ( NYSE:LMT )
Sector: Electronic Technology (Aerospace & Defense)
Market Capitalization: 117.803B
Current Price: $442.69
Breakout price: $446.45
Buy Zone (Top/Bottom Range): $439.40-$426.40
Price Target: $474.40-$485.30 (3rd)
Estimated Duration to Target: 70-73d (3rd)
Contract of Interest: $LMT 9/16/22 445c
Trade price as of publish date: $21.35/contract
6/5/22 WMWaste Management, Inc. ( NYSE:WM )
Sector: Industrial Services (Environmental Services)
Market Capitalization: $66.068B
Current Price: $159.12
Breakout price: $160.10
Buy Zone (Top/Bottom Range): $158.40-$153.25
Price Target: $166.20-$168.80 (1st), $188.70-$190.10 (2nd)
Estimated Duration to Target: 55-59d (1st), 166-176d (2nd)
Contract of Interest: $WM 1/20/23 160c, $WM 7/15/22 160c
Trade price as of publish date: $4.20/contract, $11.50/contract
Harami cross for the $IWMThe small caps had an impressive rally this week. On Friday, amid general weakness in the markets, the $IWM posted a harami cross. From a technical analysis perspective, this candlestick is a warning sign for a possible reversal. However, in order to get bearish on this sector, we would need to see some continuation to the downside early next week. For now, all that this candle tells us is that the market is somewhat indecisive. We are going from bullish to neutral into next week with regards to the $IWM.
Indices forming an intraday pennantAppears to be an intraday pennant on the 4 major indices (SPX, NDX, DJI, Small Caps). Could go either way either way Monday.
I just have some PTON puts because it's total garbage, but even garbage will float on a rising tide. just a small play.
In any case, I don;t expect the market to do anything in the last hour, but we'll see. My futures indicators are still trending bearish.
Closed: IWM July 1st 173/194 Short Strangle... for a 4.58 debit.
Comments: Plain Jane profit-taking. Collected a total of 6.33 in credits. (See Post Below). Closing out here results in a net profit of 1.75 ($175).
