Friday, September 9, 2022

Market Update 9/9/22 - Weekly Wrap-up

As I eluded to yesterday, markets don't seem too predictable this week, but I did get the market's reaction to yesterday's ECB announcement right, as well as the $VIX levels...

From Yesterday's Update

If I'm right then we should see the $VIX continue to break below the 24.60 level

In hindsight:

1. The market tried to sell the ECB news, but the $VIX was immediately sold at res., and before long it had rolled over, and broke support.

2. Later in the day we saw the market sell off again, as the $VIX was driven above the magic "24.60" level. The short sellers may have even used the queens death as a reason to sell, although the news didn't actually break until a little later in the trading day, and it was at that point, trading ground to a complete halt. I mean the volume went from light, to 0, it seemed, which I find amazing, considering I had already seen this in the charts, and I'd expect dull markets to continue into next week, and you know what they say, "Never sell a dull market"

What is with Chairman Powell speaking over the ECB. It seems like all these fed officials do is talk talk talk. Does the market, really need the same thing to be said over and over again?

US stocks close higher despite Powell’s hawkish messaging financialtimes

FX Demo Trades

I did find a couple FX trades ahead of the ECB:

Shorted the $USD into strength in what looked like a parabolic move, complete with main streme media hype

Just took out the 145 level, where I promptly went short lol
— Veteran Market Timer (@3Xtraders) September 8, 2022

This morning

I also sold precious metals which worked out pretty well.

There's always a trade somewhere

Just goes to show, there's always a trade somewhere, and this is the reason I started following FX markets, years ago, and if you're not familiar with FX, you should at least be charting FX, and trading a Demo account, and the same goes for Crypto, which has quickly grown into a monster.

If you limit yourself to only trading the SPY, or $SPX futures, you are setting yourself up for failure:

For one; you aren't even diversified if you're putting all your eggs in one basket.

2. You're not even looking for opportunities outside your comfort zone

In comparison, I have 100 different trades, in 5 different markets to choose from. Commodities, FX, Crypto, and Equities, not to mention foreign markets, and treasuries.

This also helps explain why I'm not drawing much of a crowd anymore. It's counter-productive for me to become obsessed with any one trade. Gold for instance; let the gold bugs worry about the direction of gold, and waste years waiting for gold to out-perform oil. I don't need that!

Of course these FX trades is only good practice for when I'm trading leveraged accounts, and able to get in and out of trades on an intra-day basis. Sure, I'll still have to wait for trades to settle, but as I always say, "never be in a hurry to trade".

Wrapping up the market action for the week:

Energy

The rug was pulled on NatGas, Oil, and Energy. Perhaps this was only Wall Street dirty tricks, pulled by a few hedge funds, as they returned to their trading desks, after the long summer break? It's too soon to say...

The $SPX found support above the 2950 level, and is poised to overtake the 50 day moving average, at the open, and that all but guarantees that the bulls are going to win, on this weekly Options Expiration Friday. This probably also means that money managers who don't return until next week, will be forced to chase performance.

$SPX - this super bearish looking chart is a good example of why I'm not sure of the short term direction. There's really no chart pattern I can hang my hat on. I'm also uncertain of the direction of the $VIX, but $VIX 20+ is no place to become complacent.